contents report/ldaun-annualreport 2004... · transactions of a revenue or trading nature “that...

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contents

Notice of Annual General Meeting ____________________________________ 2 - 3

Statement Accompanying Notice of Annual General Meeting_______________ 4

Corporate Information __________________________________________________ 5

Profile of the Board of Directors ______________________________________ 6 - 7

Statement on Corporate Governance _______________________________ 8 - 14

Audit Committee Report __________________________________________ 15 - 19

Statement on Internal Control __________________________________________ 20

Chairman’s Statement _________________________________________________ 21

Directors’ Report _________________________________________________ 22 - 26

Statement by Directors ________________________________________________ 27

Statutory Declaration __________________________________________________ 28

Report of the Auditors _________________________________________________ 29

Consolidated Balance Sheet ____________________________________________ 30

Consolidated Income Statement ________________________________________ 31

Consolidated Statement of Changes in Equity ____________________________ 32

Consolidated Cash Flow Statement _____________________________________ 33

Balance Sheet _________________________________________________________ 34

Income Statement _____________________________________________________ 35

Statement of Changes in Equity _________________________________________ 36

Cash Flow Statement __________________________________________________ 37

Notes to the Financial Statements _________________________________ 38 - 60

Analysis of Shareholdings _________________________________________ 61 - 63

Analysis of ICULS Holdings ________________________________________ 64 - 65

List of Properties ______________________________________________________ 66

Form of Proxy _________________________________________________________ 67

2

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Third Annual General Meeting of Lebar Daun Berhad will be held at Bilik Langat,1st Floor, Kelab Shah Alam Selangor, No. 1A, Jalan Aerobik 13/43, Persiaran Kayangan, 40704 Shah Alam, SelangorDarul Ehsan on Tuesday, 7 June 2005 at 11.00 a.m. for the following purposes:-

AGENDA

1. To receive the Audited Financial Statements for the financial year ended 31 December2004 together with the Reports of the Directors and Auditors thereon.

2. To approve the Directors’ fees for the financial year ended 31 December 2004.

3. To re-elect the following Directors, who retire by rotation in accordance with Article 84 ofthe Company’s Articles of Association:-

i) Norazmi Bin Mohamed Nurdin

ii) Datuk Mohd Hashim Bin Hassan

4. To re-appoint Messrs Khairuddin Hasyudeen & Razi as Auditors of the Company and toauthorise the Directors to fix their remuneration.

5. As special business, to consider and if thought fit, to pass the following Ordinary Resolution:-

Proposed Renewal of Shareholders’ Mandate for Recurrent Related PartyTransactions of a Revenue or Trading Nature

“THAT subject to the Companies Act, 1965 (“Act”), the Memorandum and Articles ofAssociation of the Company and the Listing Requirements of the Bursa Malaysia SecuritiesBerhad, approval be and is hereby given to the Company and/or its subsidiary to enterinto recurrent related party transactions of a revenue or trading nature with the relatedparties (“Recurrent Related Party Transactions”) as set out in Section 2.3 of the Circularto Shareholders dated 13 May 2005, subject further to the following:-

(i) the Recurrent Related Party Transactions are entered into in the ordinary course ofbusiness on terms not more favourable to the related parties than those generallyavailable to the public, and the Recurrent Related Party Transactions are undertakenon arm’s length basis and are not to the detriment of the minority shareholders of theCompany;

(ii) the disclosure is made in the annual report of the breakdown of the aggregate value ofthe Recurrent Related Party Transactions conducted pursuant to the shareholders’mandate during the financial year, amongst others, based on the following information:-

(a) the type of Recurrent Related Party Transactions made; and

(b) the names of the related parties involved in each type of Recurrent Related PartyTransactions made and their relationship with the Company;

(iii) the shareholders’ mandate is subject to annual renewal and this shareholders’ mandateshall only continue to be in full force until:-

(a) the conclusion of the next Annual General Meeting (“AGM”) of the Company, atwhich this shareholders’ mandate will lapse, unless by a resolution passed at thesaid AGM, such authority is renewed;

(Resolution 1)

(Resolution 2)

(Resolution 3)

(Resolution 4)

(Resolution 5)

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NOTICE OF ANNUAL GENERAL MEETING (continued)

(b) the expiration of the period within which the next AGM of the Company after thedate it is required to be held pursuant to Section 143(1) of the Act (but shall notextend to such extension as may be allowed pursuant to Section 143(2) of theAct); or

(c) revoked or varied by resolution passed by the shareholders in a general meeting;

whichever is earlier.

AND THAT the Directors of the Company be and are hereby authorised to complete and doall such acts and things (including executing all such documents as may be required) asthey may consider expedient or necessary to give effect to the Recurrent Related PartyTransactions contemplated and/or authorised by this Ordinary Resolution.”

6. To transact any other ordinary business of which due notice shall have been given.

By Order of the Board

RAZALI BIN HASSANLS 05531Company Secretary

Shah Alam13 May 2005

Notes:-1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not

apply to the Company.

2. To be valid this form duly completed must be deposited at the registered office of the Company at Wisma Lebar Daun, No. 2, JalanTengku Ampuan Zabedah J9/J, Seksyen 9, 40000 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before thetime for holding the Meeting or any adjournment thereof.

3. A member shall be entitled to appoint a proxy/proxies (but not more than two (2)) to attend and vote at the same meeting.

4. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy.

5. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it may appointat least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of thesaid Securities Account.

6. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

Explanatory Note on Special Business

7. The proposed Resolution No. 6, if passed, will allow the Company and/or its subsidiary to enter into recurrent related party transactionsof a revenue or trading nature which are necessary for the Group’s day-to-day operations and are in the ordinary course of business andon terms that are not more favourable to the related parties than those generally available to the public. This would avoid any delay andcost involved in convening separate general meetings from time to time to seek shareholders’ approval as and when such recurrentrelated party transactions occur. This authority, unless revoked or varied by the Company at a General Meeting, will expire at theconclusion of the next Annual General Meeting of the Company or will subsist until the expiration of the period within which the nextAnnual General Meeting of the Company is required by law to be held, whichever is the earlier.

(Resolution 6)

4

STATEMENT ACCOMPANYING NOTICE OF ANNUAL GENERAL MEETINGPursuant to paragraph 8.28(2) of the Listing Requirements of the Bursa Malaysia Securities Berhad

1. NAME OF DIRECTORS STANDING FOR RE-ELECTION

The Directors who are standing for re-election in accordance with Article 84 of the Company’s Articles ofAssociation are:-

i) Norazmi Bin Mohamed Nurdinii) Datuk Mohd Hashim Bin Hassan

2. DETAILS OF ATTENDANCE OF DIRECTORS AT BOARD MEETINGS

There were four (4) Board Meetings held during the financial year ended 31 December 2004 and the following are thedetails of the Board attendance:-

Directors No. of Meetings Attended

Norazmi Bin Mohamed Nurdin 4/4

Datuk Mohd Hashim Bin Hassan 3/4

Prof Dr. Hamzah Bin Ismail 4/4

Dato’ Nik Ismail Bin Dato’ Nik Yusoff 4/4

Dato’ Noor Azman @ Noor Hizam Bin Mohd Nurdin 4/4

3. PLACE, DATE AND TIME OF ANNUAL GENERAL MEETING

The Third Annual General Meeting of the Company will be held at Bilik Langat, 1st Floor, Kelab Shah Alam Selangor,No. 1A, Jalan Aerobik 13/43, Persiaran Kayangan, 40704 Shah Alam, Selangor Darul Ehsan on Tuesday,7 June 2005 at 11.00 a.m..

4. FURTHER DETAILS OF DIRECTORS STANDING FOR RE-ELECTION

Details of the Directors standing for re-election are set out in Directors’ Profiles on page 6 of this Annual Report.

5

CORPORATE INFORMATION

BOARD OF DIRECTORS

NORAZMI BIN MOHAMED NURDIN(Chairman/Managing Director)

DATUK MOHD HASHIM BIN HASSAN(Independent Non-Executive Director)

PROF DR. HAMZAH BIN ISMAIL(Independent Non-Executive Director)

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF(Independent Non-Executive Director)

DATO’ NOOR AZMAN @ NOOR HIZAM BINMOHD NURDIN(Non-Independent Non-Executive Director)

AUDIT COMMITTEE

PROF DR. HAMZAH BIN ISMAIL (Chairman)

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF

NORAZMI BIN MOHAMED NURDIN

NOMINATION COMMITTEE

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF (Chairman)

DATUK MOHD HASHIM BIN HASSAN

PROF DR. HAMZAH BIN ISMAIL

REMUNERATION COMMITTEE

DATUK MOHD HASHIM BIN HASSAN (Chairman)

PROF DR. HAMZAH BIN ISMAIL

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF

COMPANY SECRETARY

Razali Bin Hassan (LS 05531)

AUDITORS

Khairuddin Hasyudeen & RaziChartered AccountantsB-5-7, Megan Avenue II12 Jalan Yap Kwan Seng, 50450 Kuala LumpurTel. No. : 603-2710 7717Fax. No. : 603-2710 7727

SOLICITORS

Zul Rafique & PartnersNik Saghir & Ismail

REGISTERED OFFICE

Wisma Lebar DaunNo. 2, Jalan Tengku Ampuan Zabedah J9/JSeksyen 9, 40000 Shah AlamSelangor Darul EhsanTel. No. : 603-5511 1333Fax. No. : 603-5511 1888Website : www.lebardaun.com.my

SHARE REGISTRAR

Symphony Share Registrars Sdn BhdLevel 26 Menara Multi Purpose, Capital SquareNo. 8 Jalan Munshi Abdullah, 50100 Kuala LumpurTel. No. : 603-2721 2222Fax. No.: 603-2721 2530

PRINCIPAL BANKERS

Bumiputra-Commerce Bank BerhadRHB Bank Berhad

STOCK EXCHANGE LISTING

Bursa Malaysia Securities BerhadSecond Board

6

PROFILE OF THE BOARD OF DIRECTORS

NORAZMI BIN MOHAMED NURDIN, aged 39, Malaysian, was appointed as Chairman and Managing Director of Lebar

Daun Berhad (“LDAUN”) on 7 January 2004. He is a member of the Audit Committee. He holds a Degree in Engineering

Management and also a Degree in Civil Engineering from the University of Portland, USA. He started his career with

Petronas Berhad in November 1992 as Senior Executive, Tender and Contract Division. He was with the company until

1996. Prior to joining the LDAUN Group, he was the General Manager of Putrajaya Holdings Sdn Bhd and also served in

various senior positions in several other private companies under Putrajaya Holdings Sdn Bhd. He is the key personnel in

the management team that runs the day-to-day operations of LDAUN Group. He also sits on the board of two other private

companies. He does not hold any other directorships of public companies. He holds a total of 88,161,800 ordinary

shares (direct and indirect) and 1,000 units of ICULS (indirect) in LDAUN and is deemed to have an interest in the shares

of the subsidiary company to the extent held by LDAUN. He is the brother of Dato’ Noor Azman @ Noor Hizam bin Mohd

Nurdin, a Non-Independent Non-Executive Director and major shareholder of LDAUN. He does not have any conflict of

interest with the Company except for the recurrent related party transactions of a revenue or trading nature which are

necessary for the day-to-day operations of the Group for which he is deemed to be interested as disclosed in page 14 of

this Annual Report. He has not been convicted of any offences over the past 10 years. He attended all the four board

meetings held during the financial year ended 31 December 2004.

DATUK MOHD HASHIM BIN HASSAN, aged 60, Malaysian, was appointed as Independent Non-Executive Director of

LDAUN on 7 January 2004. He serves as the Chairman of Remuneration Committee and is a member of the Nomination

Committee. He holds a Master in Business Administration from Ohio University, USA and also a Master of Science (Food

Science) from Michigan State University, USA. He serves as the Chairman of Padiberas Nasional Berhad and as Deputy

Chairman of KUB Malaysia Berhad and also as a director of Bank Kerjasama Rakyat Malaysia Berhad and several other

private companies. He does not hold any ordinary shares or ICULS in LDAUN. He does not have any family relationship

with any Director and/or major shareholder of LDAUN and has no conflict of interest with LDAUN. He has not been

convicted of any offences over the past 10 years. He attended three out of four board meetings held during the financial

year ended 31 December 2004.

PROF DR. HAMZAH BIN ISMAIL, aged 59, Malaysian, was appointed as Independent Non-Executive Director of LDAUN

on 7 January 2004. He serves as the Chairman of the Audit Committee and is a member of the Nomination and

Remuneration Committees. He holds a Doctorate in Business Administration (Major in Accounting) from Indiana University,

Bloomington, USA. He is also a director and the Chairman of the Audit Committee of Eastern Pacific Industrial Corporation

Berhad. He does not hold any ordinary shares or ICULS in LDAUN. He does not have any family relationship with any

Director and/or major shareholder of LDAUN and has no conflict of interest with LDAUN. He has not been convicted of

any offences over the past 10 years. He attended all the four board meetings held during the financial year ended 31

December 2004.

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PROFILE OF THE BOARD OF DIRECTORS (continued)

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFF, aged 59, Malaysian, was appointed as Independent Non-Executive Director

of LDAUN on 7 January 2004. He serves as the Chairman of the Nomination Committee and is a member of the Audit

and Remuneration Committees. He obtained a Diploma in Police Science from University Kebangsaan Malaysia. He began

his career with the Royal Malaysia Police in 1965, which he served in numerous senior positions within the Royal Malaysia

Police such as the Head of Special Branch, Terengganu (1982-1983), Commandant Special Branch Training School

(1989-1992), Deputy Director Special Branch 1 (1995-1997), and Chief Police Officer of Terengganu (1997), Kedah

(1997-1999), Selangor (1999-2001). He retired from the force as the Deputy Commissioner of Police in 2001. He also

sits on the board of Malaysia AE Models Holdings Berhad and Merces Holdings Berhad and several other private companies.

He does not hold any ordinary shares or ICULS in LDAUN. He does not have any family relationship with any Director and/

or major shareholder of LDAUN and has no conflict of interest with LDAUN. He has not been convicted of any offences

over the past 10 years. He attended all the four board meetings held during the financial year ended 31 December 2004.

DATO’ NOOR AZMAN @ NOOR HIZAM BIN MOHD NURDIN, aged 43, Malaysian, was appointed as Non-Independent

Non-Executive Director of LDAUN on 7 January 2004. He graduated with an Honours in Business Management degree

from University Kebangsaan Malaysia. He began his career as a Corporate and Retail Banking Executive with MUI Bank

Berhad in 1985. He left MUI Bank Berhad in 1988 to set up Lebar Daun Construction Sdn. Bhd.. He also sits on the

board of various other private companies. He does not hold any other directorships of public companies. He holds a total

of 88,161,800 ordinary shares (direct and indirect) and 1,000 units of ICULS in LDAUN and is deemed to have an

interest in the shares of the subsidiary company to the extent held by LDAUN. He is the brother of Encik Norazmi bin

Mohamed Nurdin, the Chairman and Managing Director of LDAUN. He does not have any conflict of interest with the

Company except for the recurrent related party transactions of a revenue or trading nature which are necessary for the

day-to-day operations of the Group for which he is deemed to be interested as disclosed in page 14 of this Annual Report.

He has not been convicted of any offences over the past 10 years. He attended all the four board meetings held during the

financial year ended 31 December 2004.

8

STATEMENT ON CORPORATE GOVERNANCE

The Board of Directors of Lebar Daun Berhad (“the Board”) recognises the importance of practising the highest standardsof corporate governance throughout the Company and its subsidiary (“the Group”) and fully supports the recommendationsof the Malaysian Code on Corporate Governance (“the Code”). The Board constantly strives to ensure that the higheststandards of corporate governance are practised throughout the Group to protect and enhance shareholders’ value andthe financial performance of the Group as a part of its fiduciary duties.

The Board is pleased to report on the manner the Group has applied the principles and the extent of compliance with thebest practices of the Code throughout the financial year ended 31 December 2004.

THE BOARD OF DIRECTORS

Board Composition, Duties and Responsibilities

The Board currently has five members, comprising the Chairman/Managing Director, three Independent Non-ExecutiveDirectors and a Non-Independent Non-Executive Director. With this composition, the Board satisfies the requirement ofhaving at least one third of its members as Independent Directors. All the Independent Directors are independent of theManagement and are free from any business or other relationship that would materially interfere with the exercise of theirindependent judgement. The Board is of the view that three Independent Directors fairly reflect the interests in theCompany by the minority shareholders. The Directors, with their different background and specialisation, collectively bringwith them a wide range of experience and expertise to enable the Board in discharging its duties and responsibilitieseffectively. A brief description on the background of the Directors is presented on pages 6 and 7 of this Annual Report.

The Board has overall responsibility for corporate governance, strategic direction, formulation of policies and overseeingthe resources, investments and businesses of the Group. All Board members participate fully in major decisions and keyissues involving the Group such as approval of quarterly and annual results, budgets, significant acquisitions and disposalsof assets, major capital expenditure as well as long term strategic planning for the Group.

The roles of the Chairman and Managing Director are combined and currently held by Encik Norazmi bin MohamedNurdin. This is perceived as appropriate and in the best interest of the Group as he has extensive knowledge andexperience in the Group’s businesses, policies and administrative matters and is able to lend a hands-on approach inmanaging the Group. The Board is mindful of the dual role held by him but is of the opinion that the current Boardcomposition reflects a strong independent element so that no individual has unfettered power of decision and no smallgroup of individuals dominates the Board decision making.

The Board has identified Dato’ Nik Ismail bin Dato’ Nik Yusoff as the Senior Independent Non-Executive Director to whomall concerns regarding the Company may be conveyed.

Board Meetings and Supply of Information

The Board meets on a scheduled basis at least four times a year, with additional meetings convened when necessary.During the financial year, four Board meetings were held and the Directors’ attendance is laid out in the StatementAccompanying Notice of Annual General Meeting on page 4 of this Annual Report.

Prior to each Board meeting, all Directors are provided with a set of board papers with details on matters to be discussedat the meeting.

9

STATEMENT ON CORPORATE GOVERNANCE (continued)

All members of the Board have unrestricted access to the advice and services of the senior managers and the companysecretary. The company secretary is responsible for ensuring that all Board meeting procedures are followed and that allapplicable rules and regulations are complied with.

Directors may obtain independent professional advice in furtherance of their duties, at the Company’s expense.

Appointment to the Board

In order to comply with good practice for the appointment of new directors through a formal and transparent procedure,the Board has set up a Nomination Committee, which comprised exclusively of Non-Executive Directors, to evaluate andrecommend candidates for directorships to the Board.

Re-election of Directors

In accordance with the Company’s Articles of Association, one-third of the Directors for the time being shall retire fromoffice and be eligible for re-election Provided Always that all Directors including a Managing Director shall retire from officeonce at least in each three years but shall be eligible for re-election. A retiring Director shall retain office until the close ofthe general meeting at which he retires.

Directors’ Training

The Company does not at present have a formal orientation programme for the newly appointed Directors. Newly appointedDirectors, however, will be provided with relevant information pertaining to the Group, including visits to the Group’s operatingsites and meetings with senior management to facilitate their understanding of the nature of business and strategy ofthe Group.

All the Directors have attended and completed the Mandatory Accreditation Programme as prescribed by the BursaMalaysia Securities Berhad (Bursa Securities).

Following the amendments to the Listing Requirements of the Bursa Securities in relation to the Continuing EducationProgramme (CEP) which took effect from 1 January 2005, the CEP requirements has been repealed. In case of Directorswho have been first appointed a Director of a listed company in 2004, there is no requirement to accumulate CEP pointsfor 2005. This new provision is applicable to Encik Norazmi and Dato’ Noor Azman. However, for Directors who werepreviously required by Bursa Securities to accumulate the total of 72 or 48 points (by virtue of their first appointment dateas Director of a listed company) by end 2004, and they still have not done so, an extension of time was given until 31December 2005. Save for Dato’ Nik Ismail, who has until 31 December 2005 to comply, all other Directors haveaccumulated the minimum number of either 72 or 48 CEP points in compliance of such obligation. However, the Board ofDirectors of each listed company must evaluate and determine the training needs of its Directors on a continuous basis.The Board is responsible for selecting the relevant courses or seminars, which must be able to aid the Directors in thedischarge of their duties and to enhance their skills and knowledge.

10


BOARD COMMITTEES

The Board, in discharging its fiduciary duties, is assisted by the following Board Committees, each entrusted with specifictasks and operate within clearly defined terms of reference.

Audit Committee

The Audit Committee was established on 14 January 2004. It presently comprises of two Independent Non-ExecutiveDirectors and the Managing Director. The Audit Committee Report is set out on pages 15 to 19 of this Annual Report.

Nomination Committee

The Nomination Committee was established on 12 May 2004 and comprises of the following members:-

ChairmanDato’ Nik Ismail bin Dato’ Nik Yusoff (Independent Non-Executive Director)

MembersDatuk Mohd Hashim bin Hassan (Independent Non-Executive Director)Prof Dr. Hamzah bin Ismail (Independent Non-Executive Director)

The Nomination Committee is responsible for making recommendations to the Board on all new Board and Board Committeesappointment. The Nomination Committee will also review the required mix of skills and experience of the directors of theBoard in determining the appropriate Board balance and size of non-executive participation.

Remuneration Committee

The Remuneration Committee was established on 12 May 2004 and comprises of the following members:-

ChairmanDatuk Mohd Hashim bin Hassan (Independent Non-Executive Director)

MembersProf Dr. Hamzah bin Ismail (Independent Non-Executive Director)

Dato’ Nik Ismail bin Dato’ Nik Yusoff (Independent Non-Executive Director)

The Remuneration Committee is responsible for making recommendations to the Board on the remuneration packages ofExecutive Chairman, Managing Director and Executive Directors of the Company in all its forms, drawing from outsideadvice as necessary. The determination of remuneration packages of Non-Executive Directors is the responsibility of theBoard as a whole. Individual directors will abstain from deliberations and voting on decisions in respect of their ownremuneration package.

11


DIRECTORS’ REMUNERATION

The objective of the Company’s policy on Directors’ remuneration is to attract and retain experienced and capable Directorsto run the Group successfully. In the case of Executive Directors, the component parts of the remuneration are structuredso as to link rewards to corporate and individual performance. In the case of Non-Executive Directors, the level ofremuneration reflects the experience and level of responsibilities undertaken by the particular Non-ExecutiveDirector concerned.

The Directors’ remuneration paid or payable to all the Directors of the Company for the financial year ended31 December 2004 are as follows:-

Fees Salaries TotalRM RM RM

Executive Director - 144,000 144,000Non-Executive Directors 96,000 - 96,000

Total 96,000 144,000 240,000

The number of Directors of the Company whose total remuneration falls within the following bands are as follows:

Range of Remuneration Executive Non-Executive

Less than RM50,000 - 4RM50,001 to RM100,000 - -RM100,001 to RM150,000 1 -

There is only one Executive Director whose remuneration details have been disclosed as above. The Board is of the viewthat it’s not necessary to give break-up of remuneration of Non-Executive Directors, which is not considered significant.

SHAREHOLDERS

The Board acknowledges the need for shareholders to be informed on all material business matters affecting the Group.In addition to the various announcements made, the timely release of financial results on a quarterly basis providesshareholders and the investing public with an overview of the Group’s performance and operations.

In addition, the Board encourages full participation by shareholders at every Annual General Meeting and ExtraordinaryGeneral Meeting of the Company and opportunity is given to the shareholders to make relevant enquiries and seekclarification on the Group’s business activities and financial performance.

ACCOUNTABILITY AND AUDIT

Financial Reporting

The Board aims to provide and present a balanced and meaningful assessment of the Group’s financial performance andprospect at the end of the financial year, primarily through the annual financial statements and quarterly announcement ofresults to the shareholders as well as the Chairman’s Statement in the Annual Report. The Board is assisted by the AuditCommittee to oversee the Group’s financial reporting processes and the quality of its financial reporting.

12


Directors’ Responsibility Statement in respect of the Audited Financial Statements

The Directors are required by the Companies Act, 1965 (“the Act”) to prepare financial statements for each financial yearwhich give a true and fair view of the state of affairs of the Group and of the Company as at the end of the financial yearand of the results of the operations, changes in equity and the cash flows of the Group and of the Company for the financialyear then ended.

In preparing the financial statements, the Directors have selected and applied consistently suitable accounting policies andmade reasonable and prudent judgments and estimates. The Directors also have a general responsibility for taking suchsteps to safeguard the assets of the Group and to prevent and detect fraud and irregularities.

The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at anytime the financial position of the Group and of the Company, and ensuring that the financial statements comply with the Actand the applicable approved accounting standards in Malaysia.

Internal Control

The Statement on Internal Control is set out on page 20 of this Annual Report.

Relationship with Auditors

The Group has established and maintained an appropriate and transparent relationship with the Group’s auditors, bothinternal and external, particularly in seeking their professional advice and towards ensuring compliance with the accountingstandards in Malaysia.

COMPLIANCE WITH BEST PRACTICES IN CORPORATE GOVERNANCE

The Board is of the opinion that the Group has principally complied with the Best Practices in Corporate Governance as setout in the Code throughout the financial year 2004 save as explained above.

ADDITIONAL COMPLIANCE INFORMATIONPursuant to the Listing Requirements of the Bursa Malaysia Securities Berhad, the following additional information is provided:-

Utilisation of Proceeds

The proceeds raised from the Public Issue has been fully utilised during the financial year ended 31 December 2004 in thefollowing manner:

Working capital RM3,977,946Listing expenses RM2,022,054______________________________________________________________________________________________________________________________________________________________________

RM6,000,000____________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

Share Buybacks

The Company did not have a share buyback programme in place.

13


Options, Warrants or Convertible Securities

During the financial year, there were no options or warrants granted/issued except on 7 January 2004, the Companyissued RM18,000,000 nominal value of 3-year 2% Irredeemable Convertible Unsecured Loan Stocks 2004/2007(ICULS) for the acquisition of a subsidiary company as an integral part of the listing exercise of the Company.

American Depository Receipt (ADR) or Global Depository Receipt (GDR) Programme

The Company did not sponsor any ADR or GDR programme.

Imposition of Sanctions/Penalties

There were no public sanctions and/or penalties imposed on the Company and its subsidiary, Directors or Managementby the relevant regulatory bodies during the financial year except that on 20 August 2004, Bursa Securities imposed apublic reprimand on the Company in respect of the breach of Paragraphs 9.03(1) and 9.11(1) of the Listing Requirementsof the Bursa Securities for failure to make an immediate announcement on its proposed private placement of newordinary shares of RM0.50 each representing up to 10% of the issued and paid-up share capital of the Company andproposed transfer of the listing of and quotation of its securities to the main board of Bursa Securities (collectively to bereferred to as “the Proposals”) and Paragraph 9.16(1)(a) for replying to Bursa Securities Unusual Market Activity queryon 8 March 2004 that the Company has no knowledge of any reasons and was not aware of the existence of any rumouror report which have contributed to the substantial increase in the price in the Company’s securities when the Companyhad already commenced work on the preparation of the Proposals.

Non-Audit Fees

During the financial year, the non-audit fees paid to Messrs KPMG amounted to RM17,850 as the fee for acting asReporting Accountant in connection to the Company’s Proposed Private Placement of new ordinary shares of RM0.50each representing up to 10% of the issued and paid-up share capital of the Company (Proposed Placement) andProposed Transfer to the Main Board of the Bursa Securities (Proposed Transfer). This amount was written off to theincome statement. The Proposed Placement had been approved by Securities Commission (SC) subject to certainconditions and is now seeking for the shareholders’ approval at the forthcoming Extraordinary General Meeting while theProposed Transfer was not approved by SC on the basis that the Company was not listed on the Second Board for atleast one year and it has not met its profit forecast as disclosed in its Prospectus dated 10 February 2004. An appealhas been made to the SC on 26 January 2005 and the Company is currently awaiting SC’s decision on the appeal.

Variation in Results for Profit Estimate, Forecast or Projection

A profit forecast for the financial year ended 31 December 2004 was stated in the Prospectus of the Company dated10 February 2004 for the listing of the Company’s shares on the Second Board of the Bursa Securities. The Groupresults did not differ more than 10% from the forecasted figures stated in the Prospectus.

Profit Guarantees

There were no profit guarantees given by the Company.

Material Contracts

There were no material contracts entered into by the Company and/or its subsidiary involving the Directors’ and majorshareholders’ interests, either still subsisting at the end of the financial year or entered into since the end of theprevious financial year except for those recurrent related party transactions of a revenue or trading nature entered intofor which shareholder’ mandate had been secured.

14


Recurrent Related Party Transactions of a Revenue or Trading Nature

Breakdown of the aggregate value of recurrent related party transactions conducted pursuant to the shareholders’mandate during the financial year are as follows:

Transaction Value for the Financial Year Ended

31 December 2004

Nature of Transactions Interested Related Party RM

Construction works awarded to Norazmi bin Mohamed Nurdin(1) 73,587,089Lebar Daun Construction Sdn Bhd Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin(2)

(LDCSB) by Lebar Daun Noorazhar bin Mohamed Nurdin(3)

Development Sdn Bhd (LDDSB)

Letting of office premises Norazmi bin Mohamed Nurdin(1) 120,000to LDDSB by LDCSB Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin(2)

Noorazhar bin Mohamed Nurdin(3)

Letting of office equipment Norazmi bin Mohamed Nurdin(1) 30,000and furniture to LDDSB by LDCSB Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin(2)


Construction works Norazmi bin Mohamed Nurdin(1) 20,732,923awarded to LDCSB by Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin(2)

Basco Sdn Bhd (BASCO) Noorazhar bin Mohamed Nurdin(3)

Norazlan bin Mohamad Nordin(4)

Fatmawati bt Kasbin(5)

Construction works awarded Norazmi bin Mohamed Nurdin(1) 17,641,304to BASCO by LDCSB Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin(2)


Norazlan bin Mohamad Nordin(4)

Fatmawati bt Kasbin(5)

Notes:(1) Norazmi bin Mohamed Nurdin is the Chairman/Managing Director of Lebar Daun Berhad (LDAUN) and a Director of LDCSB (a wholly-

owned subsidiary of LDAUN). He is also a Director of LDDSB.

(2) Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin is a Non-Independent Non-Executive Director and major shareholder of LDAUN anda Director of LDCSB. He is also a Director and major shareholder of LDDSB.

(3) Noorazhar bin Mohamed Nurdin is a brother of Norazmi bin Mohamed Nurdin, Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin andNorazlan bin Mohamad Nordin. He is a Director of LDCSB and LDDSB.

(4) Norazlan bin Mohamad Nordin is a brother of Norazmi bin Mohamed Nurdin, Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin andNoorazhar bin Mohamed Nurdin. He is a Director and major shareholder of BASCO and is the spouse of Fatmawati bt Kasbin.

(5) Fatmawati bt Kasbin is a sister-in-law of Norazmi bin Mohamed Nurdin, Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin andNoorazhar bin Mohamed Nurdin. She is a Director and deemed major shareholder of BASCO and is the spouse of Norazlan bin

Mohamad Nordin.

Revaluation of Landed Properties

During the financial year, the Company did not have any revaluation policy on landed properties.

15

AUDIT COMMITTEE REPORT

OBJECTIVES

The principal objective of the Audit Committee is to assist the Board of Directors in discharging its statutory duties andresponsibilities relating to accounting and reporting practice of the holding company and each of its subsidiary andoversees the compliance with the relevant rules and regulations governing listed companies.

COMPOSITION

The Audit Committee presently comprises three directors, two of whom are Independent Non-Executive Directors of theCompany. As at the date of this Annual Report, the composition of the Audit Committee is as follows:-

ChairmanProf Dr. Hamzah Bin Ismail (Independent Non-Executive Director)

MembersDato’ Nik Ismail Bin Dato’ Nik Yusoff (Independent Non-Executive Director)

Encik Norazmi Bin Mohamed Nurdin (Chairman / Managing Director)

MEETINGS

During the financial year ended 31 December 2004, four (4) Audit Committee Meetings were held and the details ofattendance of each Audit Committee member are as follows:-

Audit Committee Members No. of Meetings Attended

Prof Dr. Hamzah Bin Ismail 4/4

Dato’ Nik Ismail Bin Dato’ Nik Yusoff 4/4

Encik Norazmi Bin Mohamed Nurdin 4/4

SUMMARY OF ACTIVITIES DURING THE FINANCIAL YEAR

The Audit Committee has discharged its duties as set out in its Terms of Reference, which accompany this Report. Duringthe year under review, the following were the activities of the Audit Committee:-

i) Reviewed, discussed and approved the audit plans for the year for the Group and the Company presented by theinternal auditor.

ii) Reviewed the adequacy of the scope, functions and staffing requirements of Group’s Internal Audit Department toensure that it was adequately staffed by employees with the relevant skills, knowledge and experience to enable theGroup’s Internal Audit Department to perform its role and that it has the necessary authority to carry out its work.

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AUDIT COMMITTEE REPORT (continued)

iii) Reviewed the internal audit reports. The Audit Committee was briefed on the audit reports issued and on the issuesraised by the internal auditor on various aspects of the system in operation, practices and procedures and internalcontrols. Special notice was taken of significant issues raised in the audit reports and that adequate corrective actionshave been taken by the Operating Management to rectify the weaknesses.

iv) Reviewed the quarterly results prior to the approval by the Board of Directors focusing particularly on:-

- changes in or implementation of major accounting policy changes;

- significant and unusual events; and

- compliance with accounting standards and other legal requirements.

v) Reviewed the related party transactions and conflict of interest situation that may arise within the Group including anytransactions, procedure or course of conduct that raises questions of Management integrity.

vi) Commissioned special reviews on specific areas of operations.

INTERNAL AUDIT FUNCTION

The Audit Committee is supported by an Internal Audit Department, which reports functionally to the Audit Committee andis independent of the activities they conduct.

The Internal Audit Department shall carry out, inter alia, the following activities:-

i) Formulate and agree with the Audit Committee on the audit plan, strategy and scope of work.

ii) Review compliance with internal policies, procedures and standards, relevant external rules and regulations, as well asassess the adequacy and effectiveness of the Group’s internal control system.

iii) Analyse and assess certain key business processes, report findings and make recommendation to improve theeffectiveness and efficiency.

iv) Assist the Board on the implementation of the Malaysian Code on Corporate Governance.

v) Other on going assurance and advisory work to the Audit Committee and the Board.

TERMS OF REFERENCE

1. Objectives

The objective of the Audit Committee is to assist the Board of Directors in meeting its responsibilities relatingto accounting and reporting practices of the Company and its subsidiary companies. In addition, the AuditCommittee shall:-

a) oversee and appraise the quality of the audits conducted both by the Company’s internal and external auditors;

17


b) maintain open lines of communication between the Board of Directors, the internal auditors and the externalauditors for the exchange of views and information, as well as to confirm their respective authority andresponsibilities; and

c) determine the adequacy of the Group’s administrative, operating and accounting controls.

2. Membership

The Audit Committee shall be appointed by the Board from among their number, which fulfils the following requirements:-

a) the Audit Committee must be composed of no fewer than 3 members;

b) a majority of the Audit Committee must be independent directors; and

c) at least one of the member of the Audit Committee:-

i) must be a member of the Malaysian Institute of Accountants; or

ii) if he is not a member of the Malaysian Institute of Accountants, he must have at least 3 years’ workingexperience and:-

• he must have passed the examinations specified in Part 1 of the 1st Schedule of the Accountants Act,1967; or

• he must be a member of one of the associations of accountants specified in Part II of the 1st Schedule ofthe Accountants Act, 1967; or

iii) fulfils such other requirements as may from time to time be prescribed by the Bursa MalaysiaSecurities Berhad.

No alternate director of the Board shall be appointed as a member of the Audit Committee.

The members of the Audit Committee shall elect a Chairman from among their number who shall be anindependent director.

In the event of any vacancy in the Audit Committee resulting in the non-compliance of item 2 (a) to (c) above, thevacancy must be filled within 3 months of that event.

The Board of Directors must review the term of office and performance of the Audit Committee and each of itsmembers at least once every 3 years to determine whether the Audit Committee and members have carried out theirduties in accordance with the terms of reference.

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3. Functions

The functions of the Audit Committee are as follows: -

a) To review the following and report the same to the Board of Directors:-

i) with the external auditors, the audit plan;

ii) with the external auditors, his evaluation of the system of internal controls;

iii) with the external auditors, his audit report;

iv) the assistance given by the Company’s employees to the external auditors; and

v) any related party transaction and conflict of interest situation that may arise within the Company or groupincluding any transaction, procedure or course of conduct that raises questions of management integrity;

b) To consider the appointment of the external auditors, the audit fee and any questions of resignation or dismissalincluding recommending the nomination of person or persons as auditors;

c) To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensureco-ordination where more than one audit firm is involved;

d) To review the quarterly results and year-end financial statements before recommending for the Board of Directors’approval, focusing particularly on:-

• any changes in accounting policies and practices;

• significant adjustments arising from the audit;

• the going concern assumption; and

• compliance with accounting standards and other legal requirements;

e) To discuss problems and reservations arising from the interim and final audits, and any matter the auditors maywish to discuss (in the absence of management where necessary);

f) To review the external auditors’ management letter and management’s response;

g) In relation to Internal Audit function:-

• Review the adequacy of the scope, functions and resources of the internal audit function, and that it has thenecessary authority to carry out its work;

• Review the internal audit programme and results of the internal audit process and where necessary, ensurethat appropriate action is taken on the recommendations of the internal audit function;

• Review any appraisal or assessment of the performance of members of the internal audit function;

• Approve any appointments or termination of senior staff members of the internal audit function or consultantswho will provide the services of the internal audit function;

• Inform itself of resignations of internal audit staff members or consultants and provide the resigning staffmembers or consultants an opportunity to submit his reasons for resigning;

• Review and assess the adequacy of the risk management framework and risk assessment.

19


h) To consider the major findings of internal investigations and management’s response;

i) To report to the Bursa Malaysia Securities Berhad matters which have not been satisfactorily resolved by theBoard of Directors resulting in a breach of the listing requirements; and

j) To consider other areas as defined by the Board.

4. Authority

The Audit Committee shall, whenever necessary and reasonable for the Company to perform its duties, in accordancewith a procedure to be determined by the Board of Directors and at the cost of the Company:-

a) have authority to investigate any matter within its terms of reference;

b) have the resources which are required to perform its duties;

c) have full and unrestricted access to any information pertaining to the Company;

d) have direct communication channels with the external auditors and person(s) carrying out the internal auditfunction or activity (if any);

e) be able to obtain independent professional or other advice; and

f) be able to convene meetings with the external auditors, excluding the attendance of the executive members of thecommittee, whenever deemed necessary.

5. Meetings

The Audit Committee shall meet at least four times a year and shall hold such additional meetings as the Chairmanshall decide in order to fulfil its duties. However, at least once a year the Audit Committee shall meet with the externalauditors.

In addition, the Chairman may call a meeting of the Audit Committee if a request is made by any committee memberof the internal or external auditors.

The Head of Internal Audit Department shall be expected to attend all meetings of the Audit Committee.

The Audit Committee may invite the Company Accountant, the external auditors or any person to be in attendance toassist it in its deliberations.

A quorum shall consist of a majority of independent directors and shall not be less than two.

A resolution in writing, signed by all the committee members shall be as valid and effective as if it had been deliberatedand decided upon at a meeting of the Audit Committee.

The Company Secretary shall act as secretary of the Audit Committee and shall be responsible, in conjunction with theChairman, for drawing up the agenda and circulating it in a timely manner, supported by explanatory documentation tocommittee members prior to each meeting.

The secretary shall also be responsible for keeping the minutes of meetings of the Audit Committee, and circulatingthem to committee members and to the other members of the Board of Directors.

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STATEMENT ON INTERNAL CONTROL

INTRODUCTION

The Malaysian Code on Corporate Governance sets out the principle that the Board of Directors of listed companiesshould maintain a sound system of internal control to safeguard shareholders’ investment and the Group’s assets. Paragraph15.27(b) of the Listing Requirements of the Bursa Malaysia Securities Berhad (“Bursa Securities”) requires the Board ofDirectors of listed companies to include a statement on internal control as a group in its annual report.

RESPONSIBILITY

The Board of Directors of the Company recognizes the importance of a sound system of internal control as part of goodcorporate governance within the Group. The Board affirms its overall responsibility for the Group’s system of internalcontrol and for the review of its adequacy and integrity. The Group has initiated the formalisation of a system of internalcontrol with on-going processes to:

• Identify, evaluate, monitor and manage significant risk affecting achievement of the Group’s business objectives; and

• Review the adequacy and integrity of the Group’s system of internal control itself.

However, such a system is designed to manage risk rather than to eliminate risk of failure to achieve the policies andbusiness objectives of the Group. It can only provides reasonable assurance, but not absolute assurance, against materialmisstatement of management and financial information and records or against financial losses or fraud.

The Board is of the view that the system of internal control in place for the year under review and up to the date ofissuance of the annual report and financial statements is sound and sufficient to safeguard the shareholders’ investment,the interests of customers, regulators and employees and the Group’s assets.

The management assists the Board in the implementation of the Board’s policies and procedures on risk and control byidentifying and assessing the risks faced, and in the design, operation and monitoring of suitable internal controls to mitigateand control these risks.

RISK MANAGEMENT FRAMEWORK

The Group’s identification and review of risks are carried out during management meetings as an on going process foridentifying, evaluating and managing the significant risks faced by the Group. The topics that were discussed includedcorporate image, environment, health and safety, human resource, product quality and competitors’ activities.

The other key elements of the Group’s system of internal control are as follows:

• There is an organisation structure, which formally defines and entrench lines of responsibility and delegation ofauthority to ensure proper identification of accountabilities and segregation of duties.

• Key functions such as finance, tax, treasury, corporate and legal matters are controlled centrally.

• Management meetings are conducted regularly to review and oversee the Group’s financial performance, businessdevelopment, management and corporate issues.

• The Group produces consolidated monthly management accounts and quarterly performances, which allow themanagement to focus on areas of concern from the data captured in a sound financial system that captured everysingle financial transaction.

• The Audit Committee examines the effectiveness of the Group’s systems of internal control on behalf of the Board. Thisis accomplished through review of the internal audit department’s work. The internal audit independently reviews therisk identification procedures and control processes implemented by the management and reports to the AuditCommittee periodically. Internal audit also reviews the internal controls in the key activities of the Group’s business andfunctional units in accordance with audit plan approved by the Audit Committee and the Board.

• An Employee Handbook clearly emphasises ethical behaviour and working environment to enhance positive corporatevalues.

• Regular visits to project sites by the Managing Director and senior management.

The Board is cognizant of the importance of maintaining appropriate controls and will continue to review the adequacy andintegrity of the Group’s system of internal control.

21

REVIEW OF THE FINANCIAL YEAR ENDED DECEMBER 31, 2004

The construction industry in 2004 began on an upbeat note but ended with undemanding performance. The domesticmarket becomes highly competitive, with excess capacity and under-utilised assets. The Government’s announcement oncut in public sector projects in the Budget 2005 has a significant impact on the construction activities in Malaysia. Newconstruction jobs are expected to be moderate with the award of smaller-scale jobs worth between RM30.0 Million andRM50.0 Million. Construction companies are expected to sustain earnings in 2005 as they work their present orderbooks but will have to maintain revenue in subsequent years.

Despite challenging conditions in the construction industry, the Group has managed to maintain its profitability for thefinancial year through its order book of RM1.5 Billion. Whilst the Group is able to say it has enjoyed yet another successfulyear, the challenging environment it operates in, has tested the Group to enable it to maintain its reputation in the privateresidential construction jobs.

The Group has continued to focus on private residential subsector as its core activities and is confident that this inclinationwill bear favourable results in the coming years.

FINANCIAL PERFORMANCE

The results were largely in line with the Group’s expectations. For the year ended 31 December 2004, the Groupregistered a profit before taxation of RM31.6 Million while the profit after taxation stands at RM21.6 Million. The profitwas on the back of turnover of RM267.6 Million.

The improved overall performance was attributed by timely progress of fast-tracking construction works on corporate office ofPerbadanan Kemajuan Pertanian Selangor, Booster Pumping Station and the prestigious D’ Kayangan development project.

PROSPECT

Trickling public sector projects and stiffer competition will leave construction companies with little option other than to vie foroverseas jobs in 2005. Whilst the residential subsector should continue to provide jobs next year, competition would be stiff.By and large, construction companies are anticipating a relatively slow 2005; the early sign came when the Governmentannounced a decline in public sector projects in the Budget 2005 aimed at narrowing the country’s fiscal deficit.

Nevertheless, Master Builders Association Malaysia said private sectors, particularly the residential subsector, would fuelthe construction industry’s progress in 2005. With finance houses expected to maintain attractive end-financing packages,the continuously high consumer confidence and increasing income levels, together with the highly liquid financial systemproperty sector expect sales of residential units to remain bullish in 2005.

On raw materials used for buildings, the local industry has seen a price increase in steel-related products due to globalmarket rates for the material besides higher transport cost caused by surging crude petroleum prices. The cost ofcement, concrete is deemed stable, perhaps due to lower domestic demand. However, overall construction cost for localmaterials has gone up by 3 to 7 percent for 2004.

Therefore, the Board is cautiously optimistic that the Group’s performance will be satisfactory, relative to the performance of theproperty sectors, as prospects will continue to be dependant on the growth of such sectors. Once the Government beginsawarding projects again the Group expects to secure sizeable projects based on the track records shown by the Group previously.

ACKNOWLEDGEMENT

On behalf of the Board of Directors, I would like to extend recognition to the Management and Staff of the Group for theirdedication, commitment and hard work. Similarly the Board also appreciates its valued clients, financiers, advisors andshareholders for their continued support and confidence.

Lastly, I would like to register the utmost thanks to my fellow directors for their generous support and invaluable contributionduring the year.

Norazmi Bin Mohamed NurdinChairman/Managing Director

CHAIRMAN’S STATEMENT

22

The directors hereby submit their report together with the audited financial statements of the Group and the Company forthe financial year ended 31 December 2004.

PUBLIC LISTING

The Company was incorporated as a private limited liability company on 28 August 2002 under the Companies Act, 1965under the name of Angkasa Ganda Sdn Bhd.

On 23 September 2002, the Company was converted to a public limited company under the name Angkasa GandaBerhad. Subsequently on 10 February 2003, it changed its name to Lebar Daun Berhad and has assumed its presentname since.

The Company was admitted to the Official List of the Second Board of the Bursa Malaysia Securities Berhad on 1 March 2004.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiary company are describedin Note 8 to the financial statements.

There have been no significant changes in the nature of these activities during the financial year.

RESULTS

Group Company

RM RM

Profit/(Loss) after taxation 21,573,917 (786,607)Accumulated losses brought forward (88,650) (88,650)_______________ _______________Unapproriated profits/(Accumulated losses) carried forward 21,485,267 (875,257)

=============== ===============

DIVIDENDS

There were no dividends proposed, declared or paid since the last financial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves and provisions during the financial year.

DIRECTORS’ REPORT

23

SHARE CAPITAL

During the financial year, the issued and paid-up share capital of the Company was increased from RM2 to RM59,241,838by way of:

(a) Issuance of 113,000,000 ordinary shares of RM0.50 each to finance the acquisition of 100% equity interest inLebar Daun Construction Sdn. Bhd.

(b) Share swap involving 483,671 shares of Hiap Aik Construction Berhad of RM1.00 each with 483,671 new ordinaryshares of RM0.50 each on the basis of one Hiap Aik Construction Berhad share for one ordinary share of theCompany.

(c) Issuance of Public Issue of 5,000,000 ordinary shares of RM0.50 each at an issue price of RM1.20 per ordinaryshare to eligible Directors, employees and business associates of the Company.

The new ordinary shares issued during the year rank pari passu in all respects with the existing ordinary shares of theCompany.

IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

On 7 January 2004, the Company issued 18,000,000 of 3 year, 2% ICULS 2004/2007 at a nominal value of RM1.00each to part finance the acquisition of the entire equity interest in Lebar Daun Construction Sdn Bhd.

Details of the ICULS are disclosed in Note 19 to the financial statements.

DIRECTORS OF THE COMPANY

Directors who served since the date of the last report are:

Norazmi bin Mohamed Nurdin

Datuk Mohd Hashim bin Hassan

Prof Dr Hamzah bin Ismail

Dato’ Nik Ismail bin Dato’ Nik Yusoff

Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin

In accordance with Article 84 of the Company’s Articles of Association, Norazmi bin Mohamed Nurdin and Datuk MohdHashim bin Hassan retire from the board at the forthcoming annual general meeting and, being eligible, offer themselvesfor re-election.

DIRECTORS’ REPORT (continued)

24

DIRECTORS’ INTERESTS

According to the register of directors’ shareholdings, the interests of directors in office at the end of the financial year inthe ordinary shares and debentures of the Company are as follows:

Number of ordinary shares of RM0.50 each

Balance as at Balance as at1.1.2004 Bought Sold 31.12.2004

Direct Interest

Norazmi bin Mohamed Nurdin - 1,581,000 - 1,581,000Datuk Mohd Hashim bin Hassan - 50,000 (50,000) -Prof Dr Hamzah bin Ismail - 50,000 - 50,000Dato’ Nik Ismail bin Dato’ Nik Yusoff - 50,000 (50,000) -Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin - 88,550,000 (2,300,000) 86,250,000

Indirect InterestNorazmi bin Mohamed Nurdin - 88,896,800 (2,318,000) 86,578,800(i)

Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin - 2,020,800 (111,000) 1,909,800(i)

2% Irredeemable Convertible UnsecuredLoan Stocks 2004/2007 of RM1.00 each

Balance as at Balance as at1.1.2004 Bought Sold 31.12.2004

Direct Interest

Norazmi bin Mohamed Nurdin - 1,000 - 1,000Datuk Mohd Hashim bin Hassan - 1,000 - 1,000Prof Dr Hamzah bin Ismail - 1,000 - 1,000Dato’ Nik Ismail bin Dato’ Nik Yusoff - 1,000 (1,000) -Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin - 1,000 - 1,000

Indirect InterestNorazmi bin Mohamed Nurdin - 4,000 - 4,000(i)

Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin - 4,000 - 4,000(i)

(i) Held by persons connected to the Director.

By virtue of their interests in the Company, the above directors are also deemed to have an interest in the shares of thesubsidiary company to the extent the Company has an interest.


25

DIRECTORS’ BENEFITS

Since the end of the last financial year, no director of the Company has received or become entitled to receive any benefits(other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directorsshown in the financial statement or fixed salary of a full-time employee of the Company) by reason of a contract made bythe Company or a related corporation with the director or with a firm of which the director is a member or with a companyin which the director has a substantial financial interest except as disclosed in Note 27 to the financial statements.

Neither during nor at the end of the financial year, did there subsist any arrangements to which the Company or itssubsidiaries was a party, with the object or objects of enabling directors of the Company to acquire benefits by means ofthe acquisition of shares or debentures of the Company or any other body corporate.

OTHER STATUTORY INFORMATION

Before the income statements and the balance sheets were made out, the directors took reasonable steps:

i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowancefor doubtful debts and satisfied themselves that all known bad debts had been written off and that no allowance hadbeen made for doubtful debts; and

ii) to ensure that any current assets which were unlikely to realise their value as shown in the accounting records in theordinary course of business had been written down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances:

i) which would render the amount written off for bad debts, or the amount of the allowance for doubtful debts, of theGroup and the Company inadequate to any substantial extent; or

ii) which would render the values attributed to the current assets of the Group and the Company misleading; or

iii) which would render any amount stated in the financial statements of the Group and the Company misleading; otherthan those already dealt with in this report and in the relevant financial statements; or

iv) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group andthe Company misleading or inappropriate.

At the date of this report, there does not exist:

i) any charge on the assets of the Group and the Company that has arisen since the end of the financial year whichsecures the liabilities of any other person; or

ii) any contingent liability in respect of the Group and the Company that has arisen since the end of the financial yearexcept as disclosed in Note 28 to the financial statements.

No contingent liability or other liability of the Group and the Company have become enforceable, or is likely to becomeenforceable within the period of twelve months after the end of the financial year which, in the opinion of the directors,will or may substantially affect the ability of the Group and the Company to meet its obligations as and when they fall due.

In the opinion of the directors, the results of the operations of the Group and the Company for the financial year ended31 December 2004 have not been substantially affected by any item, transaction or event of a material and unusualnature nor has any such item, transaction or event occurred in the interval between the end of the financial year and thedate of this report.


26

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 32 to the financial statements.

EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

Events subsequent to the balance sheet date are disclosed in Note 33 to the financial statements.

AUDITORS

The auditors, Messrs. Khairuddin Hasyudeen & Razi, retire and have expressed their willingness to accept re-appointment.

Signed on behalf of the Board in accordance with a resolution of the directors,

NORAZMI BIN MOHAMED NURDIN DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFFDirector Director

Shah Alam.

Dated : 4 April 2005


27

We, the undersigned, being two of the directors of the Company, do hereby state that in the opinion of the directors,the accompanying financial statements as set out on pages 30 to 60 are drawn up in accordance with the provisions ofthe Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view ofthe state of affairs of the Group and the Company as at 31 December 2004 and of the results of the operations, changesin equity and the cash flows of the Group and the Company for the year ended on that date.

Signed on behalf of the Board in accordance with a resolution of the directors,

NORAZMI BIN MOHAMED NURDINDirector

DATO’ NIK ISMAIL BIN DATO’ NIK YUSOFFDirector

Shah Alam.

Dated : 4 April 2005

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

28

I, SEE THOO SU JEAN, being the officer primarily responsible for the accounting records and financial management ofLEBAR DAUN BERHAD, do solemnly and sincerely declare that the financial statements set out on pages 30 to 60 are tothe best of my knowledge and belief, correct and I make this solemn declaration conscientiously believing the same to betrue, and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by )

SEE THOO SU JEAN )

at Shah Alam in the state of )

Selangor Darul Ehsan on 4 April 2005 )

SEE THOO SU JEAN

Before me,

STATUTORY DECLARATIONPURSUANT TO SECTION 169 (16) OF THE COMPANIES ACT, 1965

29

We have audited the financial statements set out on pages 30 to 60 of LEBAR DAUN BERHAD.

The financial statements are the responsibility of the Company’s directors. Our responsibility is to express an opinion onthese financial statements based on our audit.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements and to report ouropinion to you, as a body, in accordance with section 174 of the Companies Act 1965 and for no other purpose. We donot assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with approved Standards on Auditing in Malaysia. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in thefinancial statements. An audit also includes assessing the accounting principles used and significant estimates made bythe directors, as well as evaluating the overall financial statements presentation.

We believe that our audit provides a reasonable basis for our opinion.

In our opinion:

(a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 andapplicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements ofthe Group and of the Company; and

(ii) the state of affairs of the Group and of the Company as at 31 December 2004 and of the results and the cashflows of the Group and of the Company for the financial year ended on that date;

and

(b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Companyhave been properly kept in accordance with the provisions of the Act.

We are satisfied that the financial statements of the subsidiary that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the consolidatedfinancial statements and we have received satisfactory information and explanations required by us for these purposes.

The auditors’ report on the financial statements of the subsidiary was not subject to any qualification and did not includeany comment made under Section 174 (3) of the Act.

KHAIRUDDIN HASYUDEEN & RAZI Ahmad Shahrul bin Hj. MohamedAF 1161 2138/04/07 (J)Chartered Accountants Partner of the Firm

Kuala LumpurDated : 4 April 2005

REPORT OF THE AUDITORS TO THE MEMBERS OF LEBAR DAUN BERHAD

30

NOTE 2004RM

NON-CURRENT ASSETS

Property, plant and equipment 6 5,536,426

Goodwill on consolidation 7 12,937,742

CURRENT ASSETS

Trade receivables 9 181,120,672

Other receivables, deposits and prepayments 10 432,731

Amount due from customers for contract work 11(a) 21,523,464

Deposits, cash and bank balances 13 25,004,522__________________

228,081,389__________________

CURRENT LIABILITIES

Trade payables 14 84,730,547

Other payables and accruals 15 15,071,551

Amount due to customers for contract work 11(b) 6,615,764

Borrowings 16 29,461,848

Provision for taxation 10,607,904__________________

146,487,614__________________

NET CURRENT ASSETS 81,593,775__________________100,067,943================

FINANCED BY:

SHAREHOLDERS’ EQUITY

Share capital 17 59,241,838

Share premium 18 1,477,946

Unappropriated profits 21,485,267

Other reserves 19 599,575__________________

82,804,626

LONG TERM LIABILITIES

Irredeemable Convertible Unsecured Loan Stocks 19 17,053,471

Borrowings 16 201,546

Deferred taxation 20 8,300__________________

100,067,943================

The accompanying notes form an integral part of the financial statements.

CONSOLIDATED BALANCE SHEETAS AT 31 DECEMBER 2004

31

NOTE 2004RM

Revenue 21 267,574,356

Cost of sales (231,322,250)_______________________

Gross profit 36,252,106

Other operating income 755,742

Administrative expenses (3,705,272)

Other operating expenses (800)

Disposal of investment (Note 29) (241,836)

Amortisation of goodwill (681,846)_______________________

Profit from operations 32,378,094

Finance costs (822,197)_______________________

Profit before taxation 22 31,555,897

Taxation 24 (9,981,980)_______________________

Net profit after tax 21,573,917=====================

Earnings per share (sen) 25 18.20=====================

Diluted earnings per share (sen) 25 16.06=====================


CONSOLIDATED INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

32

Non Distributable Distributable<-------------------------------------------------------------------------------------------------------------------------------------------------------------------><-------------------------------------------------->

UnappropriatedShare Other (losses)

Share capital Premium reserves /profits Total

RM RM RM RM RM

Balance as at 1 January 2004 2 - - (88,650) (88,648)

Issuance during the year :

- 113,000,000 ordinary shares of RM0.50 each. 56,500,000 - - - 56,500,000

- 483,671 ordinary shares of share swap of RM0.50. 241,836 - - - 241,836

- 5,000,000 ordinary shares of RM0.50 each issued pursuant to the initial Public Offering at an issue price of RM1.20 each. 2,500,000 3,500,000 - - 6,000,000

Shares issued and Listing expenditure - (2,022,054) - - (2,022,054)

ICULS (equity component), net of tax - - 599,575 - 599,575

Net profit for the year - - - 21,573,917 21,573,917_________________ _________________ _________________ _________________ ___________________

Balance as at 31 December 2004 59,241,838 1,477,946 599,575 21,485,267 82,804,626=============== =============== =============== =============== ================


CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

33

2004RM

CASH FLOWS FROM OPERATING ACTIVITIES

Cash receipts from customers 152,277,499

Cash payments to suppliers (185,501,495)

Cash payments to employees and for administrative expenses (732,078)_______________________

Cash used in operations (33,956,074)

Interest received 583,413

Rental received 155,850

Tax paid (13,380,990)

Interest paid (477,662)_______________________

Net cash used in operating activities (47,075,463)_______________________

CASH FLOWS FROM INVESTING ACTIVITIES

Received from pledged fixed deposits 10,936,270

Purchase of property, plant and equipment (Note 26) (65,406)

Proceed from disposal of property, plant and equipment 145,000

Acquisition of subsidiary, Lebar Daun Construction Sdn. Bhd.,

net of cash acquired (Note 31) 18,854,991_______________________Net cash generated from investing activities 29,870,855_______________________

CASH FLOWS FROM FINANCING ACTIVITIES

Listing expenses (22,054)

Proceeds from issuance of shares 6,000,000

Repayment of hire purchase creditors (752,559)

Net increase in short term borrowings 23,030,992_______________________Net cash provided by financing activities 28,256,379_______________________

Net increase in cash and cash equivalents 11,051,771

Cash and cash equivalents brought forward 2_______________________Cash and cash equivalents carried forward (Note 13) 11,051,773

===================


CONSOLIDATED CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

34

NOTE 2004 2003 RM RM

NON-CURRENT ASSET

Investment in a subsidiary company 8 74,500,000 -

CURRENT ASSETS

Other receivables, deposits and prepayment 10 50,000 -

Amount due from a subsidiary company 12 3,757,531 -

Cash and bank balances 13 1,498 2________________ ____________

3,809,029 2________________ ____________

CURRENT LIABILITIES

Other payables and accruals 15 462,098 88,650Provision for taxation 2,404 -

Borrowings 16 346,954 -________________ ____________

811,456 88,650________________ ____________

NET CURRENT ASSETS/(LIABILITIES) 2,997,573 (88,648)________________ ____________

77,497,573 (88,648)================ ============

FINANCED/(REPRESENTED) BY:

SHAREHOLDERS’ EQUITY

Share capital 17 59,241,838 2

Share premium 18 1,477,946 -

Accumulated losses (875,257) (88,650)

Other reserves 599,575 -________________ ____________

60,444,102 (88,648)

LONG TERM LIABILITY

Irredeemable Convertible Unsecured Loan Stocks 19 17,053,471 -________________ ____________

77,497,573 (88,648)================ ============


BALANCE SHEETAS AT 31 DECEMBER 2004

35

NOTE 2004 2003 RM RM

Revenue 21 - -

Cost of sales - -______________ ____________

Gross profit - -

Other operating income 45,312 -

Administrative expenses (223,298) (79,300)

Loss on disposal of investment (Note 33) (241,836) -______________ ____________

Loss from operations (419,822) (79,300)

Finance costs (354,098) -______________ ____________

Loss before taxation 22 (773,920) (79,300)

Taxation 24 (12,687) -______________ ____________

Net loss after tax (786,607) (79,300)============== ============


INCOME STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

36

Non Distributable Distributable<-------------------------------------------------------------------------------------------------------------------------------------------------------------------><-------------------------------------------------->

UnappropriatedShare Other (losses)

Share capital Premium reserves /profits Total

RM RM RM RM RM

Balance as at 1 January 2004 2 - - (88,650) (88,648)

Issuance during the year :

- 113,000,000 ordinary shares of RM0.50 each. 56,500,000 - - - 56,500,000

- 483,671 ordinary shares of share swap of RM0.50. 241,836 - - - 241,836

- 5,000,000 ordinary shares of RM0.50 each issued pursuant to the initial Public Offering at an issue price of RM1.20 each. 2,500,000 3,500,000 - - 6,000,000

Shares issued and Listing expenditure - (2,022,054) - - (2,022,054)

ICULS (equity component), net of tax - - 599,575 - -

Net profit for the year - - - (786,607) (786,607)_________________ _________________ _________________ _________________ _________________

Balance as at 31 December 2004 59,241,838 1,477,946 599,575 (875,257) 59,844,527=============== =============== =============== =============== ===============


STATEMENT OF CHANGES IN EQUITYFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

37

2004 2003RM RM

CASH FLOWS FROM OPERATING ACTIVITIES

Cash payments for administrative expenses (253,948) -________________ ________________

(253,948) -

Interest received 45,312 -

Tax paid (10,283) -________________ ________________

Net cash used in operating activities (218,919) -________________ ________________

CASH FLOWS FROM INVESTING ACTIVITIES

Advances to subsidiary company (3,757,531) -________________ ________________

Net cash used in investing activities (3,757,531) -________________ ________________

CASH FLOW FROM FINANCING ACTIVITY

Listing expenses (2,022,054) -

Proceed from issuance of shares 6,000,000 -________________ ________________

Net cash provided by financing activity 3,977,946 -________________ ________________

Net increase in cash and cash equivalents 1,496 2

Cash and cash equivalents brought forward 2 -________________ ________________

Cash and cash equivalents carried forward (Note 13) 1,498 2================ ================


CASH FLOW STATEMENTFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2004

38

1. CORPORATE INFORMATION

(a) The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on theSecond Board of Bursa Malaysia Securities Berhad.

(b) The principal activity of the Company is investment holding. The principal activities of the subsidiary company aredescribed in Note 8 to the financial statements. There have been no significant changes in the nature of theseactivities during the financial year.

(c) The principal place of business and registered office is located at Wisma Lebar Daun, No. 2, Jalan TengkuAmpuan Zabedah J9/J, Seksyen 9, 40000 Shah Alam, Selangor Darul Ehsan.

(d) The financial statements are presented in Ringgit Malaysia.

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

The financial statements of the Group and the Company have been prepared in accordance with the provisions of theCompanies Act, 1965 and in compliance with applicable approved accounting standards in Malaysia.

3. DATE OF AUTHORISATION OF ISSUE

The financial statements were authorised for issue by the Board of Directors on 4 April 2005 .

4. FINANCIAL RISK MANAGEMENT POLICIES

The Group and the Company’s financial risk management policy seeks to ensure that adequate financial resources areavailable for the development of the Group’s businesses whilst managing its risks. The Group operates within clearlydefined guidelines that are approved by the Board and the Group’s policy is not to engage in speculative transaction.

The main areas of financial risks faced by the Group and the Company in respect of the major areas of treasury activityare set out as follows:

(a) Foreign currency riskThe Group and the Company do not have material foreign currency transactions, asset or liabilities and hence arenot exposed to any significant or material currency risks.

(b) Interest rate riskThe Group and the Company obtain financing through bank borrowings and hire purchase. Its policy is to obtain themost favourable interest rates available.

Surplus funds are placed with reputable financial institutions at the most favourable interest rates.

(c) Market risk

The Group and the Company do not have any quoted investments and hence is not exposed to market risks.

NOTES TO THE FINANCIAL STATEMENTS31 DECEMBER 2004

39

4. FINANCIAL RISK MANAGEMENT POLICIES (CONT’D)

(d) Credit risk

The Group and the Company’s exposure to credit risks, or the risk of counterparties defaulting, arises mainly fromcash deposits and receivables. The maximum exposure to credit risks is represented by the total carrying amountof these financial assets in the balance sheet reduced by the effects of any netting arrangements with counterparties.

The Group and the Company manage its exposure to credit risk by investing its cash assets safely and profitably,and by monitoring procedures on an ongoing basis.

(e) Liquidity and cash flow risks

The Group and the Company’s exposure to liquidity and cashflow risks arises mainly from general funding andbusiness activities.

It practises prudent liquidity risk management by maintaining sufficient cash balances and the availability of fundingthrough certain committed credit facilities.

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

All significant accounting policies set out below are consistent with those applied in the previous financial year exceptfor the adoption of FRS 112, Income Taxes and FRS 119, Employee Benefits which are applied prospectively. Apartfrom the inclusion of the extended disclosure required by the standard, the adoption of these standards have not hadany effect on the financial statements.

(a) Basis of accounting

The financial statements of the Group and the Company have been prepared under the historical cost, unlessotherwise indicated in the individual accounting policies.

(b) Revenue recognition

Revenue from contract work is recognised on the percentage of completion method determined on the proportionof cost incurred to date against total estimated cost in cases where the outcome of the contract can be reliablyestimated. In cases where the outcome of the contract cannot be reliably estimated, the revenue is recognisedonly to the extent of contract costs incurred that is probable will be recoverable. In all cases, anticipated losses areprovided for in full.

Revenue from contract work represents the proportionate contract value on construction contracts attributableto the percentage of contract work performed during the financial year.

The Company changed its revenue recognition from percentage of completion method based on survey of worksperformed against contract value to the proportion of cost incurred to date against total estimated cost.

The changes of the accounting policy give rise to a difference amounting to RM1,463,000 being attributable profitunder recognised in previous year. The difference does not constitute a prior year adjustment as the effect to thecumulative attributable profit is immaterial. As a result, this amount is accounted for in the current year incomestatement.

Rental and interest income are recognised on accrual basis unless collectibility is in doubt.

NOTES TO THE FINANCIAL STATEMENTS (continued)31 DECEMBER 2004

40

5. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)

(c) Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and its subsidiarycompany made up to the end of the financial year using the acquisition method of accounting.

The difference between the purchase price and the fair value of the net assets of the subsidiary company at thedate of acquisition is treated as goodwill or negative goodwill arising on consolidation. Goodwill on consolidation isstated at cost less impairment losses, if any. Negative goodwill arising on consolidation is not recognised asincome and is presented as a separate item in the balance sheet. The results of the subsidiary company acquiredor disposed off during the financial year are included in the consolidated financial statements from the date of theiracquisition or up to the date of their disposal. Goodwill is amortised over 20 years.

All intra group transactions and balances are eliminated on consolidation and the consolidated financial statementsreflect external transactions only.

The financial statements of the parent and it’s subsidiary are all drawn up to the same reporting date.

Minority interest is measured at the minorities’ shares of the post-acquisition fair values of the identifiable assetsand liabilities of the acquiree.

(d) Property, plant and equipment and depreciation

Property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The policyfor the recognition and measurement of impairment losses is in accordance with Note 5 (p).

Freehold land is depreciated on a straight line method using the same rate of the freehold building due to thefreehold land cost on which the building is located cannot be segregated.

Depreciation of property, plant and equipment is calculated on a straight line basis to write off the cost of eachasset to its residual value over the estimated useful life at the following rates:

Building and land 2%

Motor vehicles 20%

Plant and machinery 10%

Renovation 10%

Office equipment 10% - 40%

Furniture and fittings 10%

Telecommunication equipment 10%

Upon the disposal of an item of property, plant and equipment, the difference between the net disposal proceedsand the carrying amount is charged or credited to the income statement and the attributable portion of therevaluation surplus is taken directly to retained profits.

(e) Borrowing costs

Interest costs on borrowings to finance the construction works are capitalised as part of the construction work inprogress.

Other borrowing costs are charged to the income statement as and when incurred.


41


(f) Construction contractsWhen the outcome of a construction contract is all fixed price contract and where the outcome can be estimatedreliably, revenue is recognised on the percentage of completion method. The stage of completion is determined bythe proportion that cost incurred to date bear to the estimated total costs, and for this purpose only those coststhat reflect actual contract work performed are included as costs.

When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only tothe extent of contract costs incurred that it is probable to be recoverable and contract costs are recognised asexpenses when incurred.

Costs that relate directly to a contract and which are incurred in securing the contract are also included as partof contract costs if they can be separately identified and measured reliably and it is probable that the contract willbe obtained.

When it is probable that contract costs will exceed total contract revenue, the foreseeable loss is recognised asan expense immediately.

The aggregate of the costs incurred plus the attributable profit or foreseeable losses recognised on each contractis compared against the progress billings up to the financial year end. Where costs incurred plus attributableprofits or less foreseeable losses exceed progress billings, the balance is shown as amounts due from customerson contract works. Where progress billings exceed costs incurred plus attributable profits or less foreseeablelosses, the balance is shown as amount due to customers on contract works.

(g) Investment in subsidiary companyInvestment in subsidiary company is stated at cost less written down for permanent diminution in value of investment.Provision for permanent diminution is only made where in the opinion of the directors there is a permanentdiminution in value. Permanent diminution in the value of an investment is recognised as an expense in the periodin which the diminution is identified.

(h) Hire purchase assetsThe cost of assets acquired under hire purchase agreement is capitalised. The depreciation policy on these assetsis similar to that of the other property, plant and equipment as set out in Note 5(d). Outstanding obligations dueunder the hire purchase agreements after deducting finance expenses are included as liabilities in the financialstatements. Finance expenses pertaining to the hire purchase are charged to the income statement over theduration of the hire purchase agreement.

(i) Income taxesIncome tax in the income statement for the financial year comprises current tax expense and deferred tax.

Current tax expense is the expected amount of income tax payable in respect of the taxable profit for the year,using tax rates that have been enacted at the balance sheet date.

Deferred taxation is provided for under the liability method for all temporary differences arising between the tax basesof assets and liabilities and their carrying amount in the financial statements including unused tax losses and capitalallowances.

A deferred tax asset is recognised to the extent that it is probable that future taxable profit will be available againstwhich the deductible temporary differences can be utilised.

(j) LiabilitiesBorrowings and other payables are stated at cost.


42


(k) Provisions

Provisions are recognised when the Group and the Company have a present legal and constructive obligation as aresult of a past event, when it is probable that an outflow of resources embodying economic benefits will berequired to settle the obligation and when a reliable estimate can be made of the amount of the obligation.

(l) Cash and cash equivalents

Cash comprise of cash at bank and cash in hand including bank overdraft and deposits. Cash equivalents comprisesof investments maturing within twelve months from the date of acquisition and which are readily convertible toknown amount of cash and subject to an insignificant risk of change in value. Deposits held as pledge securities forbanking facilities are not included as cash and cash equivalents.

(m) Trade and other receivables

Trade and other receivables are carried at anticipated realisable value. Bad debts are written off in the period inwhich they are identified. An estimate is made for bad and doubtful debts based on a review of all outstandingamounts at the year end.

(n) Share capital

Ordinary shares are recorded at the nominal value and proceeds received in excess of the nominal value of sharesissued, if any, are accounted for as share premium are classified as equity. Costs incurred directly attributable tothe issuance of the shares are accounted for as a deduction from share premium, if any, otherwise it is chargedto the income statement.

External costs directly attributable to the issue of new shares are shown as a deduction in equity.

(o) Financial instruments

Financial instruments carried on the balance sheet included cash and bank balances, investments, receivables,payables and borrowings. The particular recognition methods adopted are disclosed in the individual accountingpolicy statements associated with each item.

Financial instruments are classified as liabilities or equity in accordance with the substance of the contractualarrangement. Interest, dividends, gains and losses relating to a financial instrument classified as liability arereported as expense or income. Distributions to holders of financial instruments are offset when the Group andthe Company have a legally enforceable right to set off the recognised amounts and intends either to settle on anet basis, or to realise the asset and settle the liability simultaneously.

(i) Ordinary sharesOrdinary shares are recorded at the nominal value and proceeds in excess of the nominal value of sharesissued, if any, are accounted for as share premium. Both ordinary shares and share premium are classified asequity. Cost incurred directly attributable to the issuance of shares are accounted for as a deduction fromshare premium. Otherwise they are charged to the income statement. Dividends to shareholders are recognisedin equity in the period in which they are declared and approved.

(ii) 2% Irredeemable Convertible Unsecured Loan Stocks 2004/2007 (“ICULS”)

ICULS is a compound instrument which contains both a liability component and an equity component. The fairvalue of the liability component is determined by discounting the future contractual cash flows of principal andinterest payments at the prevailing market rate for equivalent non-convertible loan stocks. This amount iscarried as liability on the amortised cost basis until extinguished on conversion or maturity of the instrument.

The fair value of the equity component represented by the conversion option is determined by deducting the fair valueof the liability component from the notional amount of the loan stocks and is included in shareholders’ equity.


43


(iii) Other financial instruments

The accounting policies for other financial instruments recognised on the balance sheet are disclosed in theindividual policy associated with each item.

(p) Impairment of assets

The carrying values of assets are reviewed for impairment when there is an indication that the assets might beimpaired. Impairment is measured by comparing the carrying values of the assets with their recoverable amounts.The recoverable amount is the higher of an asset’s net selling price and its value in use, which measured byreference to discounted future cash flows. Recoverable amounts are estimated for individual assets, or if it is notpossible, for the cash-generating unit.

An impairment loss is charged to the income statement immediately, unless the asset is carried at revaluedamount. Any impairment loss of a revalue asset is treated as a revaluation decrease to the extent of previouslyrecognised revaluation surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairment lossand is recognised to the extent of the carrying amount of the asset that would have been determined (net ofamortisation and depreciation) had no impairment loss been recognised. The reversal is recognised in the incomestatement immediately, unless the asset is carried at revalued amount.

A reversal of an impairment loss on a revalued asset is credited directly to revaluation surplus. However, to theextent that an impairment loss on the same revalued asset was previously recognised as an expense in the incomestatement, a reversal of that impairment loss is recognised as income in the income statement.

(q) Employee benefits

(i) Short term employee benefits

Salaries, wages, bonuses, allowances, paid annual leave, medical leave and non-monetary benefits are recognisedas an expense in the financial year in which the services are rendered by the employees of the Group and theCompany.

(ii) Defined contribution plan

As required by law, companies in Malaysia make contributions to the Employees Provident Fund (“EPF”). Suchcontributions are recognised as an expense in the income statement in the financial year to which they relate.Once the contributions have been paid, the Group and the Company have no further obligations.

(iii) Termination benefits

Employee termination benefits are recognised only either after an agreement is in place with the appropriateemployee representatives specifying the terms of redundancy or after individual employees have been advisedof the specific terms.


44

6. PROPERTY, PLANT AND EQUIPMENT

Group

COST

Acquisition Balanceof subsidiary as at

company Additions Disposals 31.12.2004

RM RM RM RM

Freehold land and buildings 750,000 - - 750,000

Leasehold land and buildings 3,566,005 - - 3,566,005

Motor vehicles 2,955,204 198,773 (414,101) 2,739,876

Plant and machinery 463,530 - - 463,530

Renovation 48,733 - - 48,733

Office equipment 319,987 39,429 - 359,416

Furniture and fittings 148,140 13,505 - 161,645

Telecommunication equipment 26,039 299 - 26,338______________________________________________________________8,277,638 252,006 (414,101) 8,115,543

==================================================================

ACCUMULATED DEPRECIATION

Acquisition Balanceof subsidiary as at

company Additions Disposals 31.12.2004

RM RM RM RM

Freehold land and buildings 105,000 15,000 - 120,000

Leasehold land and buildings - 71,320 - 71,320

Motor vehicles 1,572,899 450,066 (295,312) 1,727,653

Plant and machinery 149,788 31,431 - 181,219

Renovation 45,406 3,327 - 48,733

Office equipment 233,253 71,394 - 304,647

Furniture and fittings 101,078 15,250 - 116,328

Telecommunication equipment 3,964 5,253 - 9,217______________________________________________________________2,211,388 663,041 (295,312) 2,579,117

==================================================================


45

6. PROPERTY, PLANT AND EQUIPMENT (CONT’D)

NET BOOKVALUE

RM

Freehold land and buildings 630,000

Leasehold land and buildings 3,494,685

Motor vehicles 1,012,223

Plant and machinery 282,311

Renovation -

Office equipment 54,769

Furniture and fittings 45,317

Telecommunication equipment 17,121__________________

5,536,426===============

Included in the property, plant and equipment are motor vehicles acquired under hire purchase arrangement withcarrying value of RM872,665.

The land and buildings with the carrying value of RM630,000 were pledged to a licensed bank to secure bankingfacilities granted to the Group as disclosed in Note 16.

7. GOODWILL ON CONSOLIDATIONGroup2004

RMArising from acquisition of a subsidiary company during the financial year (Note 31) 13,619,588

Less: Amortisation of goodwill (681,846)__________________

Carrying amount as at 31 December 12,937,742===============


46

8. INVESTMENT IN A SUBSIDIARY COMPANY

Arising from acquisition of a subsidiary company

Company2004 2003

RM RMUnquoted shares

- At cost 74,500,000 -=============== =============

Group’s effectiveName of company Interest (%) Principal activities

2004

Lebar Daun Construction Sdn Bhd 100 Civil and building(“LDCSB”) construction works

The above subsidiary Company was incorporated in Malaysia.

9. TRADE RECEIVABLES

Group2004

RM

Trade receivables 142,887,526

Retentions sums 38,233,146_____________________181,120,672

=================

Included in trade receivables and retention sums of the Group are amounts due from related parties are as follows:

Group

Total RetentionsReceivable Sums

RM RM

Lebar Daun Development Sdn Bhd 58,701,858 15,760,160

Basco Sdn Bhd 15,663,361 3,929,326=============== ===============

The nature of the relationship with the above related parties is disclosed in Note 27.


47

10. OTHER RECEIVABLES, DEPOSITS AND PREPAYMENTS

Included in other receivables, deposits and prepayments of the Company is an amount of RM50,000 due toretention monies for the purpose of Special Administrator appointed for restructuring cost pursuant to theRestructuring Scheme of Hiap Aik Construction Berhad.

11. AMOUNT DUE FROM/(TO) CUSTOMERS FOR CONTRACT WORK

Group2004

RM

Cost incurred to date 478,646,109

Attributable profit 104,374,861______________________583,020,970

Less: Progress billings (568,113,270)______________________14,907,700

==================(a) Amount due from customers for contract work 21,523,464

(b) Amount due to customers for contract work (6,615,764)______________________14,907,700

==================

Included in cost incurred to date are the followings:

Group2004

RM

Depreciation 149,189

Interest expense- trust receipt 17,447- short term advance 450,880

==================

12. AMOUNT DUE FROM A SUBSIDIARY COMPANY

The amount due from a subsidiary company represents payments made on behalf which are unsecured, interestfree and has no specific terms of repayment.


48


13. CASH AND CASH EQUIVALENTS

Group Company

2004 2004 2003RM RM RM

Deposits with licensed banks 21,972,972 - -

Cash in hand and at banks 3,031,550 1,498 2_______________ ____________ ____________

Deposits, cash and bank balances 25,004,522 1,498 2

Bank overdrafts (Note 16) (3,641,730) - -

Less: Fixed deposits pledgedwith licensed banks (10,311,019) - -

_______________ ____________ ____________

11,051,773 1,498 2================= ============== ==============

The fixed deposits of the Group amounting to RM10,311,019 was pledged to the licensed banks as security forperformance guarantees given to the customers (Note 28).

14. TRADE PAYABLES

Included in the trade payables of the Group are amount due to a related party as follows:

Group2004

RM

Basco Sdn Bhd- trade balance 11,482,226

- retention sums 1,875,614=================

The nature of the relationship with the above related party is disclosed in Note 27.

15. OTHER PAYABLES AND ACCRUALS

Included in the other payables and accruals of the Group are advance payments from customers amountingto RM14,306,005.

49

16. BORROWINGSGroup2004

RMCurrent secured:Bank overdrafts (Note 13) 3,641,730Hire purchase liabilities 459,172Bankers acceptance 1,165,000Revolving credit 1,668,000Short term advance 22,180,992__________________

29,114,894__________________

Non-current secured:Hire purchase liabilities 201,546__________________

Current unsecured:ICULS (Note 19) 346,954__________________

29,663,394================

Hire purchase liabilitiesMinimum hire purchase payments- not later than 1 year 486,810- later than 1 year and not later than 5 years 208,868__________________

695,678Future finance charges on hire purchase liabilities (34,960)__________________Present value of hire purchase liabilities 660,718

================

Present value of hire purchase liabilitiesminimum hire purchase payments- not later than 1 year 459,172- later than 1 year and not later than 5 years 201,546__________________

660,718================

The first bank overdraft bears interest at 1.75% to 2% per annum above the bank’s Base Lending Rate and issecured by the followings:

(a) third party first legal charge of RM2,500,000 over properties owned by a director; and

(b) personal guarantee for RM2,500,000 by a director.

The second bank overdraft bears interest at 5.5% per annum and is secured by the followings:

(a) third party first legal charge of RM2,000,000 over properties owned by a director;

(b) personal guarantee for RM2,000,000 by a director; and

(c) corporate guarantee by Credit Guarantee Corporation Malaysia Berhad for RM640,000.


50

16. BORROWINGS (CONT’D)

The third bank overdraft bears interest at 2% per annum above the Bank’s Base Lending Rate and is secured bythe followings:

(a) registered charge of RM2,000,000 over properties owned by the Company; and

(b) corporate guarantee for RM2,000,000 by Lebar Daun Berhad.

The first bankers acceptance bears interest at 2% per annum from the date of claim until date of repaymentthereof. It is secured and guaranteed by the followings:

(a) registered charge of RM2,000,000 over properties owned by the Company; and

(b) corporate guarantee of Lebar Daun Berhad for RM2,000,000

The second bankers acceptance bears interest at 1.5% per annum from the date of claim until date of repaymentthereof. It is secured and guaranteed by the followings:

(a) registered charge of RM400,000 over fixed deposit of RM954,000; and

(b) personal guarantee by a director.

The revolving credit bears interest at 0.5% per annum above the bank’s Base Lending Rate calculated on daily restbasis. It is repayable by 36 equal monthly instalments. It is secured and guaranteed by the followings:

(a) third party first legal charge over properties owned by an affiliated company; and

(b) personal guarantee by a director.

The short term advance bears interest at 2% per annum above the bank’s Base Lending Rate from the date ofclaim until date of repayment thereof. It is secured and guaranteed by the followings:

(a) deed of assignment of benefit of contract from one of the Company’s projects; and

(b) corporate guarantee of Lebar Daun Berhad for RM40,000,000

Interest rate on hire purchases for the financial year range from 3.3% to 5.0% .

17. SHARE CAPITAL

Group and Company

2004 2003

RM RMAuthorised:As at beginning of the financial year100,000 ordinary shares of RM1.00 each - 100,000

Sub-divided into RM0.50 each to during the financial year - (100,000)_____________ _____________As at end of the financial year - -

=========== ===========


51

17. SHARE CAPITAL (CONT’D)

Group and Company

2004 2003

RM RMAuthorised:

As at beginning of the financial year 500,000,000 ordinary shares of RM0.50 each 250,000,000 -

Sub-divided from RM1.00 each to RM0.50 each during the financial year 200,000 ordinary shares of RM0.50 each - 100,000

Created during the financial year 499,800,000 ordinary shares of RM0.50 each - 249,900,000____________________ ____________________As at end of the financial year 250,000,000 250,000,000

================= =================

Group and Company

2004 2003

RM RMIssued and paid-up:

Balance as at 1 January 4 ordinary shares of RM0.50 each 2 -

Issued during the year 4 ordinary shares of RM0.50 each - 2

- Consideration for the acquisition of subsidiary company 113,000,000 ordinary shares of RM0.50 each 56,500,000 -

- Issued in consideration of acquisition of Hiap Aik Construction Berhad 483,672 ordinary shares of RM0.50 each 241,836 -

- Issued during listing of Company on Bursa Malaysia Securities Berhad 5,000,000 ordinary shares of RM0.50 each 2,500,000 -

____________________ ____________________As at end of the financial year 59,241,838 2

================ =================


52

18. SHARE PREMIUMGroup and Company

2004 2003

RM RMArising from public issues of 5,000,000 shares at an issue price of RM1.20 per ordinary share 3,500,000 -

Less: Listing expenses (2,022,054) -__________________ ________________

1,477,946 -============== ==============

19. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”)

Group and Company

2004 2003

RM RMNon currentIrredeemable Convertible Unsecured Loan Stocks (ICULS) at a nominal value of RM1.00 each. 18,000,000 -

============== ==============

On 7 January 2004, the Company issued 18,000,000 of 3 year 2% ICULS 2004/2007 at a nominal value ofRM1.00 each in relation to the acquisitions of a subsidiary company.

The principal terms of the ICULS are as follows:

(a) Form and denomination

ICULS are issued in registered form and in multiples of RM1.00 nominal value each.

(b) Tenure, maturity date and interest rate

Tenure for ICULS is three (3) years. Maturity date for ICULS is the date falling three (3) years from the date ofthe issue of ICULS. ICULS interest is at 2% per annum payables in arrears annually on the first and secondanniversary of the issue date and the last interest payment shall be made on the maturity date of the ICULS.

(c) Conversion rights

Each registered ICULS holder shall have the right to convert all or part of his ICULS into fully paid new ordinaryshares of the Company at the conversion price during the conversion period.

All ICULS converted under the Trust Deed shall cease to carry interest from and including the conversion date.

The new ordinary shares issued and allotted on conversion of the ICULS shall rank pari passu in all respectswith the then existing issued shares save for any dividends, rights, allotments and/or other distributions ofwhich their respective entitlement dates are before the conversion date of the ICULS.

(d) Conversion price and mode of conversion

The ICULS will be converted on the basis of RM1 per new ordinary share of RM0.50 each. The conversionprice shall be satisfied by tendering one (1) ICULS of RM1.00 each for cancellation for one (1) new ordinaryshare to be credited as issued and fully paid-up share capital of the Company.


53

19. IRREDEEMABLE CONVERTIBLE UNSECURED LOAN STOCKS (“ICULS”) (CONT’D)

(e) Redeemability

The ICULS is non-redeemable for cash. Unless previously converted, all outstanding ICULS will be mandatorilyconverted into new ordinary shares in the Company at the conversion price on the maturity date.

(f) Security and status

The ICULS is unsecured and unconditional obligations of the Company.

(g) Rights of ICULS holders on the event of default

Upon the occurrence of such an event of default, the ICULS holders, may by way of a special resolution, directthe trustee by giving notice in writing to the Company to declare the ICULS then outstanding as being immediatelypayable by the Company.

(h) Listing

ICULS is admitted to the Second Board of the Bursa Malaysia Securities Berhad.

(i) Trust Deed

ICULS are constituted by a trust deed executed by the Company and AmTrustees Berhad dated 7 January2004. The trustee acts on the benefit of the holders of the ICULS. The ICULS and the trust deed is governedby and construed in accordance with the laws of Malaysia.

The fair values of the liability component and the equity conversion component were determined upon the issue ofthe ICULS in accordance with FRS 132 “Financial Instruments: Disclosure and Presentation”. The fair value of theliability component, included in non-current borrowings, was calculated using a market interest rate for an equivalentnon-convertible loan stock. The residual amount, representing the value of the equity conversion component, netof deferred tax liability, is included in shareholders’ equity as other reserves.

The ICULS is recognised in the balance sheet as follows:

Group2004

RMFace value of ICULS issued on 7January 2004, net of transaction costs 18,000,000

Equity conversion component (other reserves) (599,575)__________________

Liability component at 31 December 2004 17,400,425===============

Current (Note 16) 346,954

Non-current 17,053,471__________________17,400,425===============

Interest expense on the ICULS is calculated on the effective yield basis by applying the effective interest rate(3.76%) for an equivalent non-convertible loan stock to the liability component of the ICULS.


54

20. DEFERRED TAXATION

Group2004

RM

As at beginning of the financial year 57,562

Deferred tax expense relating to origination and reversal of temporary differences (49,262)__________________As at end of the financial year 8,300

===============

The balance in the deferred taxation is made up of tax effects of temporary differences arising from:Group2004

RM

Capital allowances in excess of depreciation 29,800===============

Deferred tax liabilities reflected in the financial statements at 28% 8,300===============

21. REVENUE

Revenue of the Group represents the value of contract income recognised from the construction projects.

22. PROFIT/(LOSS) BEFORE TAXATION

Profit/(Loss) before taxation is arrived at after charging the following items:Group Company2004 2004 2003

RM RM RM

Auditors’ remuneration 65,000 10,000 2,000

Bad debts written off 3,200 - -

Depreciation - Administrative 513,852 - -- Cost of sales 149,189 - -

Directors’ remuneration (Note 23) 377,000 96,000 -

Loss on disposal of investments 241,836 241,836 -

Interest expense on: - hire purchase 61,172 - - - ICULS 354,098 354,098 - - term loan 64,383 - - - bank overdraft 342,544 - -

=============== =============== ==============and crediting:Gain on disposal of property, plant and equipment 26,211 - -

Interest income 596,144 45,312 -

Rental of building 123,900 - -

Rental of equipment 30,000 - -=============== =============== ==============


55

23. DIRECTORS’ REMUNERATIONGroup Company2004 2004 2003

RM RM RM

Executive Directors - Salaries 281,000 - -

Non Executive Directors - Fees 96,000 96,000 -__________________ __________________ _________________

377,000 96,000 -=============== =============== ==============

The number of directors of the Company whose remuneration are analysed into bands of RM150,000 as follows:

GroupNumber of Directors2004 2003

Executive DirectorsRM1 - RM150,000 2 -

Non Executive DirectorsRM1 - RM150,000 4 -____________ ____________

6 -========== ==========

For security and confidentiality reasons, the details of Directors’ remuneration are not disclosed with reference toDirectors individually.

24. TAXATIONGroup Company2004 2004 2003

RM RM RM

Current income tax expense 9,432,462 12,687 -

Under provision of taxation in previous year 598,780 - -Deferred tax expense relating to origination and reversal of temporary differences (49,262) - -__________________ __________________ _________________

9,981,980 12,687 -=============== =============== ==============

Reconciliation of tax expense with accounting profit:Group Company2004 2004 2003

RM RM RM

Accounting profit/(loss) 31,555,897 (773,920) (79,300)__________________ __________________ _________________Tax at the current income tax rate of 28% 8,835,700 (216,698) (22,204)Tax effect in respect of:Non-allowable expenses 596,762 229,385 22,204

Under provision of taxation in previous year 598,780 - -

Deferred tax expenses relating to origination and reversal of temporary differences (49,262) - -__________________ __________________ _________________Tax expense 9,981,980 12,687 -

=============== =============== ==============

Subject to agreement with the Inland Revenue Board, the subsidiary company has adequate tax credit underSection 108 of the Income Tax Act, 1967 up to RM46,037,000 to frank dividends out of its entire unappropriatedprofits without incurring any tax liabilities.


56

25. EARNINGS/(LOSS) PER SHARE

(a) Basic earnings per share

The basic earnings per share is calculated by dividing the Group’s net profit attributable to shareholders by theweighted average number of ordinary shares in issue during the financial year.

Group2004

RMNet profit attributable to shareholders (RM) 21,573,917____________________

Weighted average number of ordinary shares in issue 118,483,675____________________Basic earnings per share (sen) 18.20

=================

(b) Diluted earnings per share

For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assumeconversion of all dilutive potential ordinary shares.

For the purpose of calculating diluted earnings per share, the net profit for the year and the weighted averagenumber of shares in issue during the financial year have been adjusted for the effects of dilutive potentialordinary shares from the conversion of ICULS. The amount of net profit for the year is adjusted by the after taxeffect of interest expense recognised during the financial year which would have been saved on conversion ofthe outstanding ICULS into ordinary shares. The adjusted weighted average number of shares is the weightednumber of ordinary shares in issue during the financial year plus the weighted average number of ordinaryshares which would be issued on the conversion of the outstanding ICULS into ordinary shares. The ICULS aredeemed to have been converted into ordinary shares at the date of issue.

The fully diluted earnings per share is calculated by dividing the net profit for the year by the weighted averagenumber of ordinary shares issued and issuable assuming full conversion of ICULS at 31 December 2004, as follows:

Group2004

Net profit attributable to shareholders (RM) 21,573,917

Increase in net profit as a result of interest expense saved from ICULS (RM) 354,098____________________Adjusted net profit attributable to shareholders (RM) 21,928,015

=================

Weighted average number of ordinary shares in issue 118,483,675

Adjustment for assumed conversion of ICULS 18,000,000____________________Adjusted weighted average number of ordinary shares in issue and issuable 136,483,675

=================

Diluted earnings per share (sen) 16.06=================


57

26. PURCHASE OF PROPERTY, PLANT AND EQUIPMENT

During the financial year, the Group acquired property, plant and equipment with an aggregate cost of RM252,006of which RM186,600 was acquired by means of hire purchase arrangement.

27. SIGNIFICANT RELATED PARTY TRANSACTIONS

In the normal course of business, the Group undertakes transactions with certain of its related parties. Set outbelow are the significant related party transactions for the financial year (in addition to a related party disclosurementioned elsewhere in the financial statements). The related party transactions described below were carriedout on terms and conditions not materially different from those obtainable in transactions with unrelated parties.

Group2004

RMRevenue received/receivable from the following companies: - Basco Sdn Bhd 20,732,923 - Lebar Daun Development Sdn Bhd 73,587,089

Rental income received from the following company: - Lebar Daun Development Sdn Bhd 150,000

Construction cost paid/payable to the following company: - Basco Sdn Bhd 17,641,304

=================

The nature of the relationship with the related parties is as follows:

Related Parties Nature of Relationship

Lebar Daun Development Sdn Bhd Norazmi bin Mohamed Nurdin is the Chairman/Managing Director of(“LDDSB”) the Company and Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin

is a Non-Independent Non-Executive Director of the Company, bothare also directors of LDDSB. Dato’ Noor Azman @ Noor Hizam binMohd Nurdin is a major shareholder of the Company and LDDSB,Noorazhar bin Mohamed Nurdin who is a brother of Norazmi binMohamed Nurdin and Dato’ Noor Azman @ Noor Hizam bin MohdNurdin is also a director of LDDSB.

Basco Sdn Bhd (“Basco”) Norazlan bin Mohamad Nordin who is a brother of Norazmi binMohamed Nurdin and Dato’ Noor Azman @ Noor Hizam bin MohdNurdin is a director and major shareholder of Basco. Fatmawati bintiKasbin is the spouse of Norazlan bin Mohamad Nordin and sister-in-law of Norazmi bin Mohamed Nurdin and Dato’ Noor Azman @ NoorHizam bin Mohd Nurdin is a director and deemed major shareholderof Basco.


58

28. CONTINGENT LIABILITIES

RM

At the date of this report, the Group has:

Performance guarantees given to customers which is secured by fixed deposit and corporate guarantee of the Company. 27,571,413

Payment guarantees given to customers which is secured by legal charges on the Group’s landed properties and corporate guarantee of the Company. 112,250____________________

27,683,663=================

During the year, the subsidiary company has exceeded the expected time of delivery for one of the project. Theliquidated damages claims amounting to RM109,889 per day and as at the date of this report, it is accumulatedto RM3,736,215. However, the Board of Directors has strong reasons to believe that the claim will not materialiseas the delay was caused by the client.

29. STAFF COSTS

Group2004

RMSalaries, allowances, bonus and paid leave 1,940,116

EPF contributions 238,518

SOCSO contributions 15,465

Other staff related expenses 48,290____________________

2,242,389=================

The number of employees in the Group at the end of the financial year was 408 (2003: 740) of which 337 areforeign workers. These are mainly general construction workers from countries such as Indonesia, India andNepal. All of them posses valid working permit and are legally employed.

30. SEGMENT INFORMATION

No segment information reporting is presented as the Company and its subsidiary operates only in one industry.


59

31. ACQUISITION OF A SUBSIDIARY COMPANY

During the financial year, the Company acquired Lebar Daun Construction Sdn. Bhd. The fair value of the assetsacquired and the liabilities assumed are as follows:

2004RM

Property, plant and equipment 6,066,250Amount due from customers 7,402,462Trade receivables 100,048,882

Other receivables, deposits and prepayments 4,788,058Deposits, cash and bank balances 42,946,483Amount due to client for contract works (1,598,694)

Trade payables (39,898,232)Other payables and accruals (38,790,140)Bank overdrafts (2,844,203)

Short term borrowings (3,219,240)Provision for taxation (13,963,652)Deferred tax (57,562)____________________Net assets acquired 60,880,412

Goodwill on consolidation (Note 7) 13,619,588____________________Total purchase consideration 74,500,000

Less: Portion discharged by ICULS (18,000,000)Portion discharged by issuance of shares (56,500,000)Cash and cash equivalents of subsidiary Company (18,854,991)____________________

Cashflow on acquisition, net of cash acquired (18,854,991)=================

32. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) On 7 January 2004, the Company acquired the entire equity interest of LDCSB comprising 17,000,000ordinary shares of RM1.00 each from Dato’ Noor Azman @ Noor Hizam Bin Mohd Nurdin and Datin NorHayati Binti Abd Malik for a total consideration of RM74,500,000. This acquisition was satisfied via issuanceof 113,000,000 new ordinary shares in the Company and issuance of 18,000,000 ICULS 2004/2007.

(b) On 17 February 2004, the Company acquired the entire equity interest of Hiap Aik Construction Bhd (“HACB”)for a total consideration of RM241,836 which was satisfied via issuance of 483,671 new ordinary shares ofRM0.50 each in the Company at an issue price of RM0.50 per shares on the basis of one (1) new shares forevery one (1) consolidated HACB shares held by the shareholders of HACB. HACB was immediately disposedoff to a Special Administrator at RM1.00. As a result of such disposal, the Company suffered an investmentloss of RM241,835 during the year.

(c) On 1 March 2004, the Company assumed the listing status of HACB and was listed on the Second Board ofBursa Malaysia Securities Berhad.

(d) On 15 March 2004, the Board of Directors has approved the following corporate proposals:-

(i) the Proposed Placement of new ordinary shares of RM0.50 each (“Placement Shares”), representing upto of the existing issued and paid-up share capital of the Company (“Proposed Placement”); and


60

32. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONT’D)

(ii) the Proposed Transfer of the listing of and quotation for the entire issued and paid-up share capital and theoutstanding RM18,000,000 nominal value of 3 years 2% ICULS 2004/2007 from the Second Board tothe Main Board of the Bursa Malaysia Securities Berhad (“Proposed Transfer”).

(e) On 27 December 2004, the Securities Commission has approved the Proposed Placement. However theProposed Transfer was not approved.

33. EVENTS SUBSEQUENT TO BALANCE SHEET DATE

(a) On 26 January 2005, the Company has submitted an appeal to the Securities Commission to allow the ProposedTransfer to take place upon the Group meeting its profit forecast and upon having listed for one year on the Second Board.

(b) Conversion of ICULS 2004/2007

(i) On 20 January 2005, a conversion of RM25,100 nominal value of ICULS 2004/2007 into 25,100 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

(ii) On 27 January 2005, a conversion of RM1,000 nominal value of ICULS 2004/2007 into 1,000 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

(iii) On 31 January 2005, a conversion of RM2,600 nominal value of ICULS 2004/2007 into 2,600 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

(iv) On 8 February 2005, a conversion of RM17,900,000 nominal value of ICULS 2004/2007 into 17,900,000new ordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

(v) On 15 February 2005, a conversion of RM14,000 nominal value of ICULS 2004/2007 into 14,000 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share

(vi) On 22 February 2005, a conversion of RM3,100 nominal value of ICULS 2004/2007 into 3,100 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

(vii) On 7 March 2005, a conversion of RM1,900 nominal value of ICULS 2004/2007 into 1,900 newordinary shares of RM0.50 each fully paid up at a conversion price of RM1.00 per ordinary share.

The new ordinary shares issued upon conversion of the ICULS 2004/2004 shall rank pari passu in all respectswith the existing ordinary shares of the Company except that they shall not be entitled to any dividends, rights,allotments or other distributions, the entitlement date of which precedes the issue date of the new Shares.

(c) Dividend Income Received/Receivable

The subsidiary company, “LDCSB” has approved a final dividend of 25% less income tax of 28% in respect ofthe financial year ended 31 December 2004 at its Annual General Meeting held on 25 March 2005. The totalnet dividend to be received by the Company is RM3,060,000.

34. FAIR VALUES

The carrying amounts of the Group and the Company’s financial assets and financial liabilities at the balance sheetdate approximate their fair values except for the borrowings whereby it was not practicable within the constraintsof time and cost of estimate these fair values reliably.

35. COMPARATIVE FIGURES

There are no comparative figures for the consolidated financial statements as this is the first set of consolidatedfinancial statements being prepared.


61

Authorised Share Capital : RM250,000,000.00

Issued and Paid Up Capital : RM68,218,437.50

Class of Shares : Ordinary Shares of RM0.50 each

Voting Rights : One (1) vote per Ordinary Share

No. of Shareholders : 2,203

DISTRIBUTION OF SHAREHOLDINGS

No. ofSize of Holdings Shareholders % No. of Shares %

Less than 100 1,565 71.04 33,685 0.02100 - 1,000 478 21.70 132,100 0.101,001 - 10,000 84 3.81 374,707 0.2710,001 - 100,000 48 2.18 1,384,879 1.02100,001 - less than 5% of issued shares 26 1.18 48,261,504 35.375% and above of issued shares 2 0.09 86,250,000 63.22

Total 2,203 100.00 136,436,875 100.00

DIRECTORS’ SHAREHOLDINGS

Direct IndirectName of Directors No. of Shares % No. of Shares %

1. Norazmi Bin Mohamed Nurdin 1,582,000 1.16 86,579,800 63.46(1)

2. Datuk Mohd Hashim Bin Hassan - - - -

3. Prof Dr. Hamzah Bin Ismail - - - -

4. Dato’ Nik Ismail Bin Dato’ Nik Yusoff - - - -

5. Dato’ Noor Azman @ Noor Hizam Bin Mohd Nurdin 86,250,000 63.22 1,911,800 1.40(2)

Notes:

(1) Deemed interest by virtue of his brothers, Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin’s, Norazlan bin Mohamad Nordin’s andNoorazhar bin Mohamed Nurdin’s and his sister-in-law, Fatmawati bt Kasbin’s direct shareholdings in Lebar Daun Berhad

(2) Deemed interest by virtue of his brothers, Norazmi bin Mohamed Nurdin’s, Norazlan bin Mohamad Nordin’s and Noorazharbin Mohamed Nurdin’s and his sister-in-law, Fatmawati bt Kasbin’s direct shareholdings in Lebar Daun Berhad

ANALYSIS OF SHAREHOLDINGSAS AT 15 APRIL 2005

62

SUBSTANTIAL SHAREHOLDER

Direct IndirectName of Director No. of Shares % No. of Shares %

1. Dato’ Noor Azman @ Noor Hizam Bin Mohd Nurdin 86,250,000 63.22 1,911,800 1.40(1)

Notes:

(1) Deemed interest by virtue of his brothers, Norazmi bin Mohamed Nurdin’s, Norazlan bin Mohamad Nordin’s and Noorazhar binMohamed Nurdin’s and his sister-in-law, Fatmawati bt Kasbin’s direct shareholdings in Lebar Daun Berhad

LIST OF THIRTY LARGEST SHAREHOLDERS

Name of Shareholders No. of Shares %

1. Noor Azman @ Noor Hizam Bin Mohd Nurdin 74,750,000 54.79

2. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 11,500,000 8.43(Pledged securities account for Noor Azman @ Noor Hizam Bin Mohd Nurdin)

3. Shah Rudin Bin Mohammed Miskun 6,500,004 4.76

4. Mohd Nasir Bin Mohd Miskun 5,800,000 4.25

5. Mustafa Bin Mohammed Miskun 5,800,000 4.25

6. Nor Lia Binti Johan 5,300,000 3.88

7. Asnor Bin Abd Malik 4,500,000 3.30

8. HSBC Nominees (Asing) Sdn. Bhd. 3,230,400 2.37(Villawood Group Ltd)

9. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 3,168,600 2.32(Pledged securities account for Mustapah Bin Mohamed)

10. Perbadanan Setiausaha Kerajaan Selangor 2,820,000 2.07

11. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 1,990,900 1.46(Pledged securities account for Mohd Don Bin Mastol @ Mastor)

12. BHLB Trustee Berhad 1,500,000 1.10(PCM for Perbadanan Kemajuan Pertanian Selangor)

13. Norazmi Bin Mohamed Nurdin 1,366,000 1.00

14. Abu Sujak Bin Mahmud 1,145,100 0.84

ANALYSIS OF SHAREHOLDINGS (continued)

AS AT 15 APRIL 2005

63

Name of Shareholders No. of Shares %

15. Perbadanan Kemajuan Negeri Selangor 1,000,000 0.73

16. CIMSEC Nominees (Asing) Sdn. Bhd. 1,000,000 0.73(ING Asia Private Bank Limited for Stardom East Limited)

17. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 873,400 0.64(Pledged securities account for Mhd Omar Bin Abdul Hamid)

18. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 500,000 0.37(Pledged securities account for Jamil Bin Saimon)

19. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 252,400 0.18(Pledged securities account for Hishammuddin Bin Abu Nawar)

20. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 245,400 0.18(Pledged securities account for Megat Abdul Munir Bin Megat Abdullah Rafaie)

21. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 216,000 0.16(Pledged securities account for Norazmi Bin Mohamed Nurdin)

22. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 207,100 0.15

(Pledged securities account for Ng Keng Huat)

23. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 200,000 0.15(Pledged securities account for Noorazhar Bin Mohamed Nurdin)

24. Mohamad Khashim Bin Abdul Sakor 161,900 0.12

25. Bumiputra-Commerce Nominees (Tempatan) Sdn. Bhd. 141,000 0.10(Pledged securities account for Anuar Bin Abd. Malik)

26. Khalek Bin Awang 134,900 0.10

27. Norgayah Binti Md Razi 106,300 0.08

28. Mayban Securities Nominees (Tempatan) Sdn. Bhd. 102,100 0.07(Pledged securities account for Zailan Bin Mohd Zahid)

29. Razali Bin Hassan 80,000 0.06

30. Abdul Rashid Bin Ismail 72,000 0.05

TOTAL 134,663,504 98.70

ANALYSIS OF SHAREHOLDINGS (continued)

AS AT 15 APRIL 2005

64

No. of outstanding ICULS : RM46,800.00 nominal value of 2%

Voting Rights : None

No. of outstanding ICULS holders : 30

DISTRIBUTION OF OUTSTANDING ICULS

No. ofSize of Holdings ICULS holders % No. of ICULS %

Less than 100 2 6.67 100 0.21

100 - 1,000 23 76.67 20,500 43.80

1,001 - 10,000 4 13.33 12,400 26.50

10,001 - 100,000 1 3.33 13,800 29.49

100,001 - less than 5% of ICULS issued 0 0.00 0 0.00

5% and above of ICULS issued 0 0.00 0 0.00

Total 30 100.00 46,800 100.00

DIRECTORS’ ICULS HOLDINGS

Direct IndirectName of Directors No. of ICULS % No. of ICULS %

1. Norazmi Bin Mohamed Nurdin - - 1,000 2.14(1)

2. Datuk Mohd Hashim Bin Hassan - - - -

3. Prof Dr. Hamzah Bin Ismail - - - -

4. Dato’ Nik Ismail Bin Dato’ Nik Yusoff - - - -

5. Dato’ Noor Azman @ Noor Hizam Bin Mohd Nurdin 1,000 2.14 - -

Notes:

(1) Deemed interest by virtue of his brother, Dato’ Noor Azman @ Noor Hizam bin Mohd Nurdin’s direct ICULS holdings in Lebar DaunBerhad

ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOANSTOCKS 2004/2007 (“ICULS”) HOLDINGSAS AT 15 APRIL 2005

65

LIST OF OUTSTANDING ICULS HOLDERS

Name of ICULS holders No. of ICULS %

1. Zainon @ Wan Haslah Binti Hj Hussin 13,800 29.49

2. Ridzuan Bin Ismail 6,500 13.89

3. Hasnol Bin Ibrahim 2,000 4.27

4. Harith Bin Ridzuan 2,000 4.27

5. Loh Sai Eng 1,900 4.06

6. Haslinoryati Binti Ikhwan 1,000 2.14

7. Noor Azman @ Noor Hizam Bin Mohd Nurdin 1,000 2.14

8. Hasmida Binti Abu Bakar 1,000 2.14

9. Ahmad Sallehudin Bin Mohamed Ali 1,000 2.14

10. Zaidi Bin Mohd Daud 1,000 2.14

11. Rasidah Binti Mion 1,000 2.14

12. Norkhairilnizan Bin Azimbazri 1,000 2.14

13. Ridzuan Bin Yacob 1,000 2.14

14. Chin Tian Yit Long 1,000 2.14

15. Kamarozaman Bin Ibrahim 1,000 2.14

16. Mohd Othman Bin Bakir 1,000 2.14

17. Zamri Bin Ab. Rahman 1,000 2.14

18. Raja Khairul Bahrin Bin Raja Ariffin 1,000 2.14

19. Tuan Azwa Bin Tuan Ismail 1,000 2.14

20. Zainuddin Bin Hussin 1,000 2.14

21. Nazri Bin Shaharun 1,000 2.14

22. Mohd Shahrom Bin Zainuddin 1,000 2.14

23. Ahmad Kamal Bin Hamzah 1,000 2.14

24. Norsiah Bte Marijo Saringat 1,000 2.14

25. Omar Bin Hamzah 500 1.07

26. Ab Ghaus Bin Ismail 500 1.07

27. Goh Wan Ching 400 0.85

28. Norshimah Binti Abd Karim 100 0.21

29. Wong Gek Keong 90 0.19

30. Chong Hon Choi 10 0.02

TOTAL 46,800 100.00

ANALYSIS OF IRREDEEMABLE CONVERTIBLE UNSECURED LOANSTOCKS 2004/2007 (“ICULS”) HOLDINGS (continued)AS AT 15 APRIL 2005

66

LIST OF PROPERTIESAS AT 31 DECEMBER 2004

Approximate Land Area/ Net BookAge of Built-up Value at

Description/ Buildings Area 31.12.2004 Date ofLocation Tenure Existing Use (Years) (Sq. m.) (RM'000) Acquisition

No. 2, Jalan Tengku Leasehold 31/2 Storey 3 254/935 2,000 14.10.2002Ampuan Zabedah J9/J 99 years CornerSection 9 Expiring on Shop/Office40000 Shah Alam 20.12.2100 BuildingSelangor Darul Ehsan

No. 4, Jalan Tengku Leasehold 31/2 Storey 3 153/599 1,495 14.10.2002Ampuan Zabedah J9/J 99 years IntermediateSection 9 Expiring on Shop/Office40000 Shah Alam 20.12.2100 BuildingSelangor Darul Ehsan

Lot 9024 Freehold 4 Storey 12 156/603 210 09.12.1996Jalan Mahang Satu (end lot)Taman Meru Utama Shop Office41050 KlangSelangor Darul Ehsan

Lot 9026 Freehold 4 Storey 12 156/603 210 09.12.1996Jalan Mahang Satu IntermediateTaman Meru Utama Shop Office41050 KlangSelangor Darul Ehsan

Lot 9028 Freehold 4 Storey 12 156/603 210 09.12.1996Jalan Mahang Satu IntermediateTaman Meru Utama Shop Office41050 KlangSelangor Darul Ehsan

Note: - The above properties were registered under the name of Lebar Daun Construction Sdn Bhd, a wholly-owned subsidiary the Company.

67

FORM OF PROXY

(Incorporated in Malaysia)

I/We ____________________________________________________ NRIC No./Company No. _______________________________

of_______________________________________________________________________________________________________________

being a member/members of LEBAR DAUN BERHAD, hereby appoint ______________________________________________

_________________________________________________________ NRIC No. _____________________________________________

of_______________________________________________________________________________________________________________

or failing whom, __________________________________________ NRIC No. _____________________________________________

of_______________________________________________________________________________________________________________

as my/our proxy to vote for me/us and on my/our behalf at the Third Annual General Meeting of the Company to be heldat Bilik Langat, 1st Floor, Kelab Shah Alam Selangor, No. 1A, Jalan Aerobik 13/43, Persiaran Kayangan, 40704 ShahAlam, Selangor Darul Ehsan on Tuesday, 7 June 2005 at 11.00 a.m. and at every adjournment thereof for/against theresolution(s) to be proposed thereat.

Please indicate with an “X” in the appropriate space how you wish your vote to be cast. Unless voting instructions arespecified herein, the proxy will vote or abstain from voting as he thinks fit.

Resolution For Against

No. 1 Receipt of Audited Financial Statements and Directors’ and Auditors’ Reports

No. 2 Approval of Directors’ fees

No. 3 Re-election of Norazmi Bin Mohamed Nurdin as Director

No. 4 Re-election of Datuk Mohd Hashim Bin Hassan as Director

No. 5 Re-appointment of Messrs Khairuddin Hasyudeen & Razi as Auditors

No. 6 Proposed Renewal of Shareholders’ Mandate forRecurrent Related Party Transactions of a Revenue or Trading Nature

As witness my/our hand this ___________________________ day of __________________________________________ 2005

No. of shares held :Signature/Common Seal

Notes:-

1. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall notapply to the Company.

2. To be valid this form duly completed must be deposited at the registered office of the Company at Wisma Lebar Daun, No. 2, JalanTengku Ampuan Zabedah J9/J, Seksyen 9, 40000 Shah Alam, Selangor Darul Ehsan not less than forty-eight (48) hours before thetime for holding the Meeting or any adjournment thereof.

3. A member shall be entitled to appoint a proxy/proxies (but not more than two (2)) to attend and vote at the same meeting.

4. Where a member appoints two (2) proxies, the appointment shall be invalid unless he specifies the proportions of his holdings to berepresented by each proxy.

5. Where a member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, it mayappoint at least one (1) proxy in respect of each Securities Account it holds with ordinary shares of the Company standing tothe credit of the said Securities Account.

6. If the appointer is a corporation, this form must be executed under its Common Seal or under the hand of its attorney.

68

The Company Secretary

Lebar Daun Berhad (590945-H)

Wisma Lebar DaunNo. 2, Jalan Tengku Ampuan Zabedah J9/JSeksyen 9, 40000 Shah Alam

Selangor Darul EhsanMalaysia

AFFIX STAMPHERE

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